The Australian beer community has been on tenterhooks ever since Scottish brewer BrewDog announced in July last year it was planning on building a new brewery down under.
The self-proclaimed beer punks were looking at two cities in particular: Brisbane and Newcastle. It sparked enthusiastic interest from local authorities and businesses. Even South Australia weighed in with an initially comical, but later lucrative, pitch for the brewery to set up there.
Earlier this month it was finally announced that Brisbane had landed the brewery.
BrewDog’s investment would total $30 million, with the construction of a 50 hectolitre, 3000-square-metre brewing and canning facility at Murarrie, on the southern side of the Brisbane River near the Gateway Bridge. A restaurant, taproom and visitor centre would also be part of the project.
Construction on the brewery is set to start later this year with the first locally brewed BrewDog beers to roll out in early 2019. The project is expected to generate 150 jobs in the Brisbane area over the next five years.
The news created plenty of excitement in Brisbane but also raised a few questions. In a press release, director of BrewDog Australia Zarah Prior said support from Brisbane Marketing, Austrade and the Queensland government had been essential in sealing the deal for Brisbane. It made some in the industry ask: should government be incentivising foreign brewers to set up shop on local shores, particularly when support for homegrown brewers has been sparse at best?
The southeast Queensland beer scene has been buoyant in recent years, with the city’s brewers consistently punching above their weight at important beer competitions and in consumer polls. Brisbane’s brewers are both excited and nervous about the addition of such a celebrated rival to the market.
Newstead Brewing’s founder and CEO Mark Howes describes himself as “optimistically ambivalent” about BrewDog’s arrival.
“They make amazing beers, they market them extremely well, they’re likeable lads, they have significant resources and they push the boundaries of beer manufacture,” Howes says. “That is an extremely competitive strategic mix.
“In saying that, the notoriety of BrewDog in Brisbane, the impetus of changing the drinking culture, the inroads they will make into the commercial brewer's heartland, will inevitably support all the breweries in Brisbane in one way or another.
“I am not looking forward to the impending price war, but I’m excited about really having to differentiate Newstead to make sure we can add value to our brand,” Howe says.
The debate isn’t just a storm in a beer glass, though. Serious economics are at play. Breweries such as Newstead highlight the economic benefit to the city through a vibrant small brewing sector. In short, small breweries create jobs.
Australia’s largest brewing company – AB InBev-owned CUB – proudly proclaims on its website it creates nearly 1600 jobs at its Australian breweries. Brewing minnow Newstead creates 70. But consider CUB controls 47 per cent of the almost two-billion-litre beer market and a brewery such as Newstead is doing well if it brews just one- or two-million litres. On an employee-per-litre-of-beer scale, the financial benefit spectacularly sides with the Newsteads – and the BrewDogs – of the world. If half the beer consumed in Australia was brewed by small local breweries such as Newstead, the industry could potentially employ 10,000 additional brewery jobs.
So, with so much up for grabs, should the Queensland government have involved itself in luring BrewDog? Economist and public policy expert Gene Tunny says while it’s dangerous to be doctrinaire about such initiatives, in general special assistance such as that provided to BrewDog is undesirable.
“BrewDog won’t be bringing new productivity-boosting knowledge to Queensland,” Tunny says. “Humans have known how to brew beer for millennia. The ancient Mesopotamians and Egyptians were doing it, and we certainly have plenty of breweries and micro-breweries in Queensland already.”
Tunny says because the Brisbane economy isn’t in a recession, many of the additional people employed by BrewDog would be attracted away from other jobs. “The net impact on employment may be very small or non-existent,” he says. “Consider that BrewDog’s product will be competing with the products of other local breweries, possibly stealing market share and ultimately production and jobs from them.”
Tunny says if job creation was the rationale, attracting breweries to cities with high unemployment would make more sense.
Even so, Tunny believes there is a benefit in consumers shifting their expenditure to craft beer.
“If consumers are willing to pay more for a more boutique product, there are benefits in that,” he says.
And that seems to be where the balance will lie. Will BrewDog’s gravity bring in a tide that raises all boats? Mark Howes believes the ultimate impact depends on the business the local breweries are in.
“If I was a brewpub I'd be excited, knowing that Brisbane will become more of an attractive beer tourism destination and that good beer culture would be further promoted in general,” he explains. “If I was in the wholesale game I would be nervous, to be honest … I still believe it will be a net benefit to these breweries as it will force us to be more considerate about how we go about our business. That is a very positive thing for the community.”