Helios Brewing Company announced last week that it would be dropping its in-venue prices as a result of the Federal Government’s excise rebate extension, which will come into effect from 1st July.
The move by Helios highlights the increasingly competitive and also diverse nature of the brewing industry in Australia, and the need for even small breweries to be able to compete on multiple levels.
“Because we are tiny, we have never had a sales staff, we’ve never really had marketing people multiple venues or a production facility. Historically, for us, canning beer was really just a marketing exercise, we couldn’t make any money on it, and it didn’t make sense to send it far and wide, some products we lost money on,” said Helios founder Scott Shomer.
There were suggestions from the industry body the Independent Brewers Association on how to use this rebate, and the Federal Treasurer Josh Frydenberg said that the rebate extension “will turbo-charge growth and deliver skilled jobs in family-owned independent breweries around the country”.
Helios has already employed new staff on the back of the rebate, is expanding its distribution, is reinvesting it in the business and has found scope to lower prices a bit in their tap house.
“We know our prices are on the high end for a quality product produced in small quantities and this will help us a bit to try to compete with others that have benefit of scale,” explained Shomer.
“When you start thinking about the little guys, there are many different sizes of little guys, so some of the other independents around us have not one but multiple venues, each of them is open 60-80 hours a week,” he said.
“We have one tasting room that’s only open 29 hours a week and we’ve been trying to compete with this. Many of them have their own canning lines, we have to have a subcontractor come in so putting beer in cans is even more expensive for us.
“We don’t have the luxury of scale or of corporate backers, which many do now, and we don’t have a distribution arm, so we’ve had a lot of things working against us.”
The size of Helios and the nature of the beers it brews have both been a benefit and a disadvantage, he explained.
“We’re a young upstart brewery, brewing really strong beers, the excise on beers like our Zeus was half of our production cost.
“We couldn’t go to the market and say look, we want to charge $40 a 4-pack for this, people would say no way. We ate a lot of that excise ourselves just to make it viable in the market.
“Even at the lower end of things, our Poseidon is a California-style Pale Ale and 30 per cent of production cost was excise.
“So we don’t have a sales or distribution arm and barely any hours to sell beer over the bar to get a decent profit. Then all of a sudden the relief from this massive tax is very real to us. It is a massive game-changer for me, it changes my entire life!”
“Honestly I keep pinching myself thinking, the government is really trying to help the little guy.”
The extra money Helios will get back has not only allowed them to lower prices, but to hire two sales representatives and also expand distribution.
“Just in the last 2 weeks we’ve got a distributor in South Australia and Victoria, so we’re brewing our hearts out!
“We’ve bought in a marketing company for the first time and we’re still looking at profit margins that are better than we’ve ever been able to make before.”
“We don’t have to pay what once was a massive burden to us, but that doesn’t make new customers or make new sales. What does is hiring marketing people, salespeople, and because we are relying so much on loyalty of our customers, giving something back to them as well.”
Another reason behind the price cuts is to reward the loyalty of customers that helped Helios through the pandemic.
“[When the pandemic hit] I told our staff let’s assume that we’re closed in 6 weeks, what do we do?” “We completely reinvented ourselves, put beer in cans and distributed wider to diversify and lessen the pain of being closed.
“We opened a drive-thru with big signs in our car park and sold beers in cans right out the door. This is the crux of the entire issue of why I’m dropping my prices.
“Patrons we relied on every week would buy a carton from us, they would ask, how are you doing Scott? They wanted to make sure we stayed in business. I just sold them a carton a week ago and they made the point of coming in week after week to make sure we were going to survive.”
Giving something back to our loyal customers is key, but there are also retailers to consider, especially with Helios looking further afield for distribution,
“We’re reviewing if we have scope to extend these things to wholesale customers,” Shomer explained.
Helios, which according to Shomer has been built on twin pillars of sustainability and quality beer, is using everything at its disposal to contribute to the vibrant Australian brewing industry.
“I’ve always wanted to grow and get us out there more, and this allows us to compete.
“I’m trying to grow my business in the best way I know how, and being able to repay some small part of that customer loyalty and by getting those prices closer in alignment with people who have other advantages is certainly part of our investment and growth strategy.”