The Australian beer industry is set for its biggest shake-up in decades as the countries two biggest brewers – CUB and Lion – welcome new bosses.
Earlier this month, David Smith (above, left) departed his role as Managing Director Diageo Southern Europe – and former Diageo Australia MD – to return to Australia as MD of Lion following the retirement of James Brindley after 27 years with the brewery.
Danny Celoni (above, right) finished up as CEO at PepsiCo last week and arrives at CUB in early February to replace Peter Filipovic, who announced he was retiring last year after 25 years with the brewery.
So what’s next for Lion and CUB with two new titans at the helm? The companies already control 80% of Australia’s beer market, so where will they turn to seek new avenues for growth?
The industry is already speculating that Celoni and Smith will continue down the path of acquiring more craft breweries to diversify their offering, with industry research group IBIS World is predicting a 4.5% growth in revenue in the craft beer category.
Lion paid more than $500million last year for Australia’s largest independent craft brewer — the Byron Bay-based Fermentum, which has brands including Stone & Wood, Two Birds and Fixation.
Independent Brewers Association general manager Kylie Lethbridge told the Courier Mail the transaction was “the big news of 2021”.
“It certainly put a ripple through the industry but it’s very difficult to predict what will happen this year because we’re not privy to the strategies of the multinationals,” she said.
“But we do know that they’re going hell for leather to diversify and I don’t doubt that over time more independent craft breweries will be purchased.”
However, Queensland University of Technology retail expert Professor Gary Mortimer said craft beer was “going corporate” and he expected more independent brewers to be bought out by multinationals and larger companies.
“Mainstream beer consumption is falling and craft beer consumption is rising,” he said.
“The whole mindset has changed. If we go back to the ’70s it was all about XXXX and VB and volume consumption. There was a lot of heavy drinking.
“Now we’re preferring craft beers. Australian beer drinkers’ tastes have changed.”
It’s not just about beer these days. Under Brindley’s leadership, Lion made a canny decision to buy 50% of Four Pillars Gin, which has twice been named International Gin Producer of the Year at the annual International Wine and Spirit Competition. It also imports the number one seltzer in Australia, White Claw.
CUB meanwhile has added a slew of categories to its portfolio following its merger with Asahi – including Vodka Cruiser and Nikka Whisky – and also has a toe in the winemaking business with tap and canned wine brand Riot!
Celoni seeks growth opportunities
Celoni noted on LinkedIn last week that he was already looking at growth opportunities.
“It’s with mixed emotions that I wrap up my final day with PepsiCo,” he said. “Thank you to the talented and passionate ANZ team, to the PepsiCo Executive Committee for your leadership and support, to our amazing customers for your ongoing partnership, and our world class farmers and suppliers. Thank you for the opportunity to learn from some of the best in the business and for all of the great memorable and rewarding moments. I’ll be taking with me lifelong learnings and lifelong friendships. I’m incredibly proud of what we have all achieved together, the business is in great shape and I know it will continue to go from strength to strength. To the entire PepsiCo community – thank you – I will always be one of your greatest supporters.”
Robert Iervasi, Group CEO, Asahi Beverages Oceania, welcomed Celoni, saying: “Danny has built a formidable reputation across the beverages industry in Australia and Asia over 25 years.
“Danny’s proven ability to successfully run large and complex businesses, across alcohol and non-alcohol, was critical in our decision to recruit him to become our new CEO of CUB.
“We’ve had the pleasure of working closely with Danny over his time with PepsiCo, one of Asahi Beverages’ key strategic partners. We’ve observed first-hand his ability to understand and deliver great results for his customers, and build exceptional teams.
“CUB is a great business, with an unbelievable portfolio, and we couldn’t be more pleased that Danny will be running it. With Danny’s forward-thinking approach to business, he’s going to make a very significant contribution to building our teams, delivering on our strategies for growth, and forging great relationships with our customers and partners.”
Celoni said: “It’s an honour to be given the opportunity to lead CUB and join Asahi Beverages. With its unrivalled beverage portfolio and commitment to innovation, I’m excited by the strategic direction and growth opportunities for the business.
“I’m particularly looking forward to working with CUB’s customers and partners as we seek to navigate the evolving COVID-normal environment and the other challenges that lie ahead.”
“I’m looking forward to creating an equally exciting future at CUB with a brilliant team, customers and industry partners.”
Swapping Guinness for James Squire
Meanwhile, Smith shared this message on LinkedIn: “Thank you to all of the fantastic colleagues, customers & partners I’ve been fortunate to work with at Diageo over the last 22 years. I have continuously learnt from working with superb people, consistently been proud of Diageo’s amazing brands & positive impact in the world, and consider myself very lucky to have led the business in three superb places.
“A huge thank you and good luck to all at Diageo (past & present), especially the fantastic teams in Ireland, Australia & Southern Europe.”
Smith replaces Lion MD James Brindley (above), who called ‘last shout’ the same week as CUB’s Filipovic. Brindley stepped down at the end of 2021 after 12 years in the top job.
Lion CEO Stuart Irvine said: “David is a highly respected industry leader and already a familiar face to many of our Australian partners. He is committed to growing businesses through patient investment, enduring partnerships and motivating his teams to deliver outstanding outcomes for customers.
“We look forward to welcoming him back home to Australia and to Lion in January.”
Smith said: “I am delighted to be joining Lion, a business I have long admired for its leading brands, great culture and fantastic team. I look forward to working with the Lion team to create growth for the business and our customers.”
Challenging year ahead for beer industry
It’s a challenging 12 months ahead for both Celoni and Smith as the pandemic continues to play havoc.
Australian Tax Office figures show that pubs and clubs sold 40 million fewer pints of beer between July and September last year than they did during the same period in 2019 and before COVID-19.
That’s a massive drop of more than 50% in beer sales for struggling venues.
In 2020, pubs and clubs lost over $1 billion in beer sales due to lockdowns and other restrictions, but these latest figures from the ATO show that losses for 2021 could well exceed that.
The ATO recorded 903,982 litres of alcohol as having been served in beers over the counter in July-September 2021 compared to 1,993,027 litres during the same period in 2019.
Pubs have also been hit with staff shortages and supply chain issues in recent months.
Chief Executive of the Brewers Association of Australia John Preston has called for the Federal Government to use the forthcoming Federal Budget to reduce Australia’s fourth highest beer tax in the world to give pubs and clubs a fighting chance.
“We are very concerned that on February 1 the Australian Government will hit Australian beer drinkers with one of the biggest tax increases in more than a decade – it’s not right and it’s not sustainable. Other countries have been reducing their tax on draught beer to give pubs and beer drinkers a break.”
Watch this space …
By the time Australia fully reopens, the leadership of most of the leaders of the country’s top drinks companies will look completely different to five years ago, while still looking oddly the same as executives switch places. Here’s our handy guide: The drinks industry CEO reshuffle