Former Foster's brewer damns bland beers of the mainstream Read more: http://www.smh.com.au/business/former-fosters-brewer-damns-bland-beers-of-the-mainstream-20131222-2zt0l.html#ixzz2oFJ2UmF5

[Peter Smith]

http://www.smh.com.au/business/former-fosters-brewer-damns-bland-be...

[Peter Smith]

It is a bit like your fortune teller grabbing you aside one day and telling you her tarot card readings were all made up, or your lifelong family doctor admitting on his retirement that herbal medicine and a few acupuncture needles in your back was actually a better bet.

But here is Trevor O'Hoy, former boss of Australia's biggest brewer, Foster's, and a 33-year servant of the company doing just that, pronouncing the unthinkable: that mainstream beers are simply bland and inoffensive.

''The majors produce deliberately quite bland products that are inoffensive, while craft brewers have spotted a gap and are providing these smaller-run, more exciting products,'' said Mr O'Hoy, who resigned as Foster's chief executive in 2008 after a costly acquisition strategy that included the $3.7 billion purchase of winemaker Southcorp.

However, Mr O'Hoy does not even attempt to say he did any different during his five-year leadership of Carlton & United Breweries, at the time the nation's largest brewer, thanks to its powerhouse brand VB. Rather, he openly admits he had no choice but to pump out bland beer as well to please the punters and his shareholders.

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''Oh, absolutely, and I make no apologies for that because the big, big consumption from consumers are in those western suburbs of the country and they are wanting the big commercial brands - so that's fine.

''However, if you want to make it sustainable, be wary of what people are drinking in Brunswick Street or Paddington and all that.''

To some extent Mr O'Hoy is still the salesman and, of course, talking his own book, as the former Foster's lifer now sits on the board of Stone & Wood, a boutique craft brewer based at Byron Bay.

For he has seen the future of brewing, and it is all about craft beer meshing with the demands of a changing consumer who is open to experimenting with a large suite of tastes and flavours packed into a bottle of beer.

''The new consumer - and this applies to all products - is experimenting a lot more, which is interesting because I come from a world, a generation, where you stick with one brand for life. But the new consumer has multiple brands on multiple occasions on the one day.

''So it's a very different world and the craft brewers are filling a gap that's really been wanting to be filled for some time.

''And I think it's good news for the total sector because it creates more interest in beer.''

Craft beer is seen by many in the industry as a game-changer, a liferaft that will help save beer as a category by clawing consumers back from rival beverages such as wine, spirits and ciders. While sales of traditional beer are flatlining or slightly negative, craft beer is growing at 13 per cent a year, albeit from a low base, and now accounts for 3.2 per cent of the total beer sector.

Craft brewers such as Stone & Wood are sprouting up all over the country, with drinkers smacked with a huge variety of choices when they walk into a bar or drive through a bottle shop.

Mr O'Hoy's connection to Stone & Wood, founded the year he walked from Foster's, stems from his old brewing days with the craft brewer, the creation of three former Foster's managers whom Mr O'Hoy mentored.

''It's three middle-aged managers I mentored in my former life,'' he said. ''I might have over-mentored them because they have set up their own business now.''

Mr O'Hoy has a small personal stake in Stone & Wood.

Also now on the board of vitamins and supplements company Swisse, Mr O'Hoy has loosened up his corporate dance card of late to accommodate new directorships and interests. He recently stepped down from the Australian Cricket Board, the North Melbourne Football Club and a position at Monash University.

He has landed back in the pubs and beverage game, sitting on the board of property group Redcape, which has a portfolio of 71 hotels and its recent pubs spinoff Hotel Property Investments that has under its wing 41 pubs and seven detached bottle shops.

Mr O'Hoy also does not mind getting involved with a business that is out on the frontier, and this certainly applies - in a geographical sense - to his role with Mongolia's biggest beer and vodka maker and distributor, APU.

He sits on the board of APU, which has a 60 per cent market share of the local beer and vodka sector.

Asked what is big in Mongolian pubs these days, Mr O'Hoy offered a simple snapshot of the average Mongolian drinker who, surprisingly, is not too different from drinkers out west. He said: ''Mongolia is a rerun of what you are seeing in Western Australia - it's resources driving a mining boom and there are a lot of thirsty miners.''

Read more: http://www.smh.com.au/business/former-fosters-brewer-damns-bland-be...

[Flanagan]

I think if it was put to them, the big breweries couldn't disagree with this unless they wanted to go into serious denial, but they would rejig the story their own way and substitute bland and inoffensive with terms like drinkable and familiar etc etc.

There are plenty of consumers who say they prefer a lighter bodied and supposedly easy to drink commercial beer over a craft beer, I maintain this is an illusion myself based on aversion to the unknown where you need to inconvenience the bar person with silly questions about what the beer tastes like (which they may or may not know, but strangely this rarely happens in this country because you're either in a craft beer bar or a tied bar). There is a perception of craft beer as being somewhat foreign and obscure - eg. you see a new tap at the bar, it could be anything, black, blonde, belgian, high ABV, it could have chilli in it, it could be cider, so you go for a Mac's. That simple behaviour in itself gives the big brands an advantage given the drinking behaviour of the core market. 

The big breweries are of course moving into the craft market now with their crafty brands, I think they are rated inferior by the general craft consumer but rather favourably by the general beer quaffer who's enticed by something more flavoursome than the likes of Speight's. There is a HUGE market to be won here and it has been playing out for a while now but it has a ways to go. The big breweries are active by releasing their own (pretty goofy) brands and acquiring breweries with established reputations in the craft market. From the craft side, as far as I'm aware, distribution avenues are opening up geographically (beer in supermarkets, more bottling) and breweries are trying to expand however they have capacity constraints and it's not their business to focus on market expansion. Moa and McCashins are exceptions. I like how in the States the likes of Sam Adams and Sierra Nevada have broken into the mainstream but I don't see signs of that happening here. Here brewers are popping out of the woodwork everywhere but they are mostly happy doing their own local thing in local bars. What does it mean for joe consumer going for a few beers with his mates on main street NZ who could really do with some choice?

Stu McKinlay has an insightful piece on the Stuff beer blog today about the breakdown of cost in a pint of beer. Amazingly ingredients make up only 8%. That is for Yeastie Boys, I expect it's a lot lower for commercial beers, given (a) their relative lack of flavour, and (b) their absolute largesse in advertising, sponsorships, social media campaigns. OK the difference is a lot less with their crafty brands but it still exists and makes me think there is potential to spend more on ingredients in the future, or indeed absorb price increases. I suspect the faux craft beer quality will increase over the coming years because of this and as they invest time in their brewers. I also expect they will reduce the amount of brands and focus on the successful ones (the amount of those faux craft brands on the shelves now is a joke). The question for me is will faux craft shove the recognisable and accessible craft beer styles like Tuatara Hells, Epic Pale Ale, even Emersons pilsner out of the market and confine the craft breweries to niche styles? There is little reason why they shouldn't be able to make great beer, right? (I can do so in my kitchen…) (and by the way, arguably the consumer should be happy if the beer is great no matter who brews it, however diversity, choice and local production is much more desirable, I hope y'all can agree) 

Remember folks, the consumer is dumb but somehow they are always right. 2 things I would like to see happen: a reduction in Excise Tax on breweries (or brewing companies) of below a certain volume of beer per year, and a curtailing of to the practice of offering discounts to "tied bars". The latter may (hopefully) be driven by consumer behaviour, aided by the entry of Independent Breweries' brands diluting the big two's dominance; the former may be driven by good political sense in promoting the NZ food & beverage sector. These might give small breweries a chance to compete against the mass distribution, the billboards, the TV ads, the major sports sponsorships, and the homogenisation.

But I would pose the question, what is more likely to be the 6-pack drink of choice at a barbecue in 5 years time? A craft brew or a big brewery brand?