Craft gains ground in Australian drinks market

As Australia’s craft beverage scene continues to bloom, IWSR speaks to key players about consumer purchasing behaviour, big brand competition, and post-Covid prospects


While Australia’s drinks scene was historically dominated by big beer and speed-rail spirits, there is now a burgeoning craft contingent within brewing, winemaking, distilling and mixology.

According to Mark Ward, founder of Australian vermouth brand Regal Rogue, international craft brands have “started to take Australia more seriously” in recent years, which has in turn “encouraged local producers to [launch] local distilleries and brands”.

Australia now “has a presence in every category on a global scale”, Ward notes, with brands across the drinks spectrum championing local ingredients and know-how. “Australia’s land, terroir and farming expertise is truly being showcased and celebrated locally and internationally,” he adds.

In terms of the domestic market, Tommy Keeling, IWSR research director, notes that Australian drinkers have been drawn towards craft products thanks to the “broader trend towards moderation”, which is “leading consumers to prize quality over quantity”. He adds: “Australia is at the forefront of the craft movement, with a similar level of pick-up and development to the UK and US.”

Stuart Gregor, co-founder of Four Pillars Gin and president of the Australian Distillers Association, notes that within the craft segment, “growth is coming from every state and territory in the country – in regional and rural areas and increasingly in cities and nearby suburbs.”

Premium-and-above gin volume consumption has more than doubled in Australia between 2014 and 2019. IWSR data also shows that premium-plus gin volumes are expected to have increased by over 10% in 2020, and the segment will likely continue its growth trajectory over the next 5 years as well.

The growth in the craft segment is typified by the increase in traditional gin’s super-premium-plus sales: while standard gin volumes in Australia are estimated to have declined by over 15% in 2020, super-premium will likely have increased by almost 15% and ultra-premium grew by almost 20% – albeit from much lower bases.

Gregor adds that the membership of the Australian Distillers Association has increased from 30 members in 2014 to 280 at the start of 2021, showing the rapid growth of the domestic distilling industry. “The greatest growth is coming from gin but there are also many more great whisky distillers cropping up all over Australia as well as rum distilleries predominantly in the warmer north of the country,” he says.

Beer and gin dominate the craft scene

Beer and gin are the dominant craft categories in Australia as both have relatively low barriers to entry and can be produced quickly, in contrast to aged spirits. “Both also have the advantage of offering almost unlimited flavour combinations,” adds Keeling.

Australian craft spirits continue to face intense competition from larger brands, says Gregor, adding that some players are “doing a great job [of] bringing people to the gin category with their marketing budgets… Our job is to then take that consumer and show them something unique, maybe a little more luxury, and deliver them a fantastic experience.”

In terms of beer, the craft segment is proving to be a “significant contributor” to beer’s overall growth in Australia, says Mark Haysman, chief executive and managing director at Mighty Craft, an independent craft portfolio in Australia. Haysman adds that craft brands owned by big brewers that often act as an entry point into the craft segment have “also seen considerable growth, though still not quite achieving the growth contribution of independent craft”.

The impact of Covid-19

Despite the intermittent closure of Australia’s on-trade, craft has “seen a surge during Covid”, says Haysman. Ward adds that consumers’ desire to support local businesses means there are now more cocktail lists “entirely compiled with local brands”. Domestic demand for Regal Rogue, he says, has become “unpredictable in a positive way”.

With inbound tourism missing during the pandemic, IWSR director Thorsten Hartmann notes that “consumption has been entirely in the hands of Australians”, which has proven to be beneficial for craft producers as local drinkers “understand regionality cues in small-batch spirits better than tourists”. Furthermore, state-by-state lockdowns and restrictions on inter-state travel have boosted the ‘shop local’ ethos during the pandemic, adds Hartmann.

As in other markets, lockdown has meant that disposable income for many consumers has risen, meaning they are more likely to trade up and buy super-premium craft products in supermarkets. However, Hartmann observes that due to restrictions in brick-and-mortar shopping, such as curfews, larger established brands have to an extent benefited from consumers’ functional shopping mind-set and their reduced browsing on the shop floor.

Opportunities for the future

Going forward, demand for craft will likely continue to grow in Australia as more local operations come online. As the on-trade starts to tentatively reopen post-Covid, Haysman believes the “ability to try and explore will be key in growing consumer access and familiarity with ‘indie craft’”. Meanwhile, more wholesalers are responding to consumer demand by dedicating more shelf space to craft, he observes.

“Local has become a key factor in consumer buying habits and we have seen the resurgence and acceleration of local brands,” comments Haysman. “Consumers are also becoming more aware of locally owned vs. big corporate brands resulting in location and regionality starting to play key factors in the purchase decisions.”

More broadly, says IWSR’s Keeling, the main underlying macro trends – such as premiumisation, growing health-consciousness, digitisation and provenance – “have not been interrupted by the pandemic and can be expected to continue throughout the forecast period, to 2024.” This bodes well for the craft sector in Australia.


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