E-Malt.com News article: Australia: Lion to shut Malt Shovel Brewery in inner Sydney

Lion, one of the largest drinks groups in the world, intends shutting a craft brewery in inner Sydney that has been operating for 36 years as rising costs, a shrinking beer market and consumer spending cutbacks take their toll, the Financial Review reported on June 10.

Lion, which makes XXXX Gold and Tooheys, said it would shut the Malt Shovel Brewery in Camperdown by the end of August and transfer brewing of products to other plants in northern NSW and Geelong in Victoria. The move follows a decision three weeks ago by Asahi, its largest rival, to close one of its own craft beer operations in Victoria.

Asahi, Australia’s biggest beer company after the acquisition of Carlton & United Breweries for $16 billion in 2020, shut down the Matilda Bay Brewpub in Healesville in Victoria’s Yarra Valley on May 19 after five years of operation, citing high costs.

A string of small craft brewers around Australia have already collapsed in the past few months as rising costs and consumer spending cutbacks mean they are no longer viable.

Lion and Asahi, which have much stronger balance sheets, are feeling the same pinch in an overall beer market that has shrunk by 6 per cent in the past five years.

Lion managing director James Brindley said staff at Malt Shovel had been informed of the “difficult decision” of a proposed closure at the end of August.

He said beer producers were in a difficult period, with overall volumes declining in Australia by 100 million litres since 2019.

“There have also been ongoing cost-of-living pressures reducing discretionary spending, and continuing increases in costs like energy, labour and ingredients, as well as government excise, which is now the third-highest in the world,” he added.

Malt Shovel has been in operation since 1988, when it was set up by independent brewer Chuck Hahn. Lion took control in 1993 and by 1998 it had become the early home of the group’s craft beer business. “It has played a pivotal role in pioneering the craft beer movement in Australia,” Mr Brindley said.

The Malt Shovel brewery makes a range of beers including James Squire, Eumundi, New Belgium and Little Creatures. That production will be transferred to other Lion sites.

They include a $30 million brewery at Murwillumbah in northern NSW, after Lion acquired the Stone & Wood beer business and its parent group Fermentum in 2021.

Ryan Saundry, general manager of Asahi Beverage’s craft beer division, known as Fire & Earth Ventures, said it had been a “difficult decision” to close the Healesville brewpub and cease manufacturing at the site.

He said most of Matilda Bay’s brewing would be transferred to Asahi Beverages’ other Fire & Earth Ventures sites, including the Pirate Life brewery in Port Adelaide.

“This will help us simplify our operations,” Mr Saundry said.

The Healesville venue found the going tough because of rising costs including wages, energy bills, raw materials inflation and steeper than usual increases in government-imposed excise, which is tied to inflation.

Before its acquisition in 2020 by Asahi, CUB had made a string of craft beer acquisitions to try to deliver extra growth as mainstream beer brands went backwards.

CUB acquired 4 Pines, Pirate Life and Balter Brewing in quick succession from 2017 onwards, while Asahi bought the Green Beacon craft beer brand in late 2019.

Several small operators in craft beer have run into financial trouble in the past few months.

Sou’West Brewery, based at Torquay on Victoria’s Surf Coast, was put under the control of administrators KordaMentha in May. Temple Brewing, based in the Melbourne’s East Brunswick, collapsed on May 22, while Deeds Brewing, based in Melbourne’s Glen Iris, went into liquidation on May 10.


10 June, 2024