Update 9/3/12 …and it finally happened.
There has been interesting speculation in The Age that Fosters could lose the Corona and Stella licences.
One of the the most incisive ideas in this article is tucked away right at the very end:
“When Foster’s releases its interim results next month it will show that the margins and profits of its beer business have held up, while volume has fallen. The question for the company is, how long can it keep letting market share go before it has to start buying volume?
In beer economics, less production volume means less recovery of production fixed costs. It’s all to do with losing or winning scale economies.”
It pretty much sums up the big brewing industry – it’s a unit cost game.We all love to complain about beer prices, but just stop for a moment and think about the fixed cost differences between a brewery making 6 hectolitre batches (approximately 1800 bottle) and a brewery making more than a million stubbies per day. Think of the difference in the cost of the ingredients, the bottles, the labour and the relative cost of staff per unit produced. Think of how much these same beers cost in the bottleshop.
I just hope that the quest for volume doesn’t see the business pressuring Matilda Bay to tinker with beers like Dogbolter or Alpha Pale Ale as they have in the past with Redback. Big Helga was obviously a style selected to appeal to a wide audience but was still a good, if undemanding, beer. Their competition in the ‘big craft’ market, Lion Nathan’s James Squire, has seemingly tweaked the flavour of its major brews – the Amber and Golden Ales – in the search for market share and the beers have suffered – though their popularity has grown…you could call this BeerMatt’s Paradox.
BeerMatt’s Paradox states that the more there is in a beer, particularly flavour, the smaller the potential market for it will be as there is more to dislike about it as well. Beers like Corona are the natural result of the operation of this paradox. Consistent, but largely nondescript, beers that are widely popular because there is nothing really to dislike about them (except that they have nothing to like about them – another paradox, let’s call it BeerMatt’s Corollary). They have no real character and they stand for nothing . They are the low-fat vanilla ice-cream or modern career politician of the beer world.
The other interesting element to this speculation is the question of what will happen to XXXX’s intended ‘Corona killer’–Summer Bright Lager–if Lion does get the Corona licence in Australia?
While XXXX officially denied that their summer offering was going after Corona when it launched, it looks, quacks and waddles like a duck. Many Lion Nathan affiliated pubs in Brisbane have the light lager on the high value shelf, right next to Corona, in their fridge facings and that wouldn’t happen without the brewery’s blessing. They are going head to head.
With two beers looking exactly the same and tasting almost identical to the average punter, but one selling as low as $4 a bottle compared to Corona’s $7+, there is only so far exotic goes before the choice of beer changes from “from where you’d rather be” to “I’ll holiday at home and save my money.”
There’s no official reports about the beer’s sales yet but indications from pub is that Summer Bright Lager is kicking goals. Wander into many pubs in Brisbane and the visible market share is close to 50-50, especially in the high-value XXXX pubs where Summer Bright Lager is being heavily promoted.
Will Summer Bright Lager make a significant dint in Corona’s growth? If it does will it give force to the speculation about Foster’s losing the licence? But would Grupo Modelo give Lion Nathan the Corona licence while they were competing directly against it?,Would Lion kill off what seems to be a successful launch in order to get the “jewel in the crown in the foreign premium beer category”?
No matter what, interesting times lay ahead in the world of uninteresting beer.