The House Standing Committee on Economics held an inquiry this week into competition and dynamism in the supermarket and alcohol sectors.

It was held via videoconference on 25 and 26 July 2023, with the committee hearing from Coles, Woolworths, Metcash, the Australian Food and Grocery Council and the National Farmers Federation.

The inquiry follows concerns that a lack of market competition has made Australia’s economy less resilient, with the committee analysing unbalanced market power in a variety of industries.

Prior to the inquiry Dr Daniel Mulino said: “The grocery retail sector is fundamental to the everyday lives of Australians. There are also high levels of market concentration in the sector, so it’s vital that we better understand the effects such concentration have on competition, particularly around price, for consumers.

“The supermarket sector also has a strong hold on the packaged alcohol market, which again has implications for consumers around price and on smaller players in the sector.

“So we will be probing this area as well, especially with the local craft beer industry gaining in popularity. Australia’s independent brewers are renowned for their innovation so the committee is eager to ensure diversity in the beer industry and that our home-grown companies can continue to thrive.”

Domination by large corporations

The committee heard from Coopers and the Independent Brewers Association during the alcohol inquiry.

Former Independent Brewers Association chair Richard Adamson described the Australian beer market as “one of the most restrictive in the world with market power in the hands of a small number of large corporations”.

“Two foreign-owned companies dominate beer supply and two supermarkets dominate the sale of beer,” he said in his opening remarks.

“The Endeavour Group, is now one of the largest producers behind the two Japanese-owned beverage companies, Asahi and Kirin, and Coles Supermarkets are rapidly expanding their own beer brands.

“These conditions make it very challenging for independent-owned small businesses to access key distribution channels and respond to consumer demand.

“This restrictive and anti-competitive marketplace…threatens the existence of many independent brewers.”

Coopers Brewery managing director Dr Tim Cooper (above) said his brewery’s share of packaged beer sales in independent liquor stores in Australia was between 7-8%, but at the two large retail operators it was only 4%.

Dr Mulino asked Adamson if independent brewers had experienced the same.

“I believe our numbers collectively as an independent industry mirror Cooper’s quite closely,” he replied.

“Anecdotally, we’re seeing that one in five to one in four shelf spaces for beer is now one of their privately owned private label brands.

“So, we are getting squeezed out of the major retailers shelf space at the same time.

“Twenty years ago the supermarkets weren’t in the beer space. And they’ve developed their own brands and taken advantage of the interest in craft beer.”

Endeavour & Coles respond to inquiry claims

Following his appearance at the hearings, Dr Cooper told Brews News that his research showed that the major retailers had between 55-60% of the packaged beer market and their increasing focus on proprietary brands was worrying.

An Endeavor spokesperson said the company “won’t comment on commercial terms with majors like Coopers, but we proudly have dedicated shelf space for genuine small producers who are constantly innovating to meet changing customer tastes.”

Read Dr Tim Cooper’s interview with Brews News regarding the challenging market situation and the responses by Endeavour and Coles here.