For better or worse, Australia has a deep love affair with beer. While we haven't quite yet cracked the global top 10 worldwide per capita beer consumption list, our national thirst isn’t sated easily. Traditionally, the majority of market share has been concentrated in the hands of three industry heavies SABMiller (VB, Carlton, Pure Blonde, Matilda Bay), Lion Nathan (James Squire, XXXX, Heineken, Corona) and of course Coopers. But the times they are a changing here in the land down under. As beer consumption levels recover from a 25 year low in 2012/13, craft brewers are thriving. The craft beer revolution is here.

Understanding the forces behind why craft beer and brewers have carved out a foothold in the Australian market begins with economics - the supply and demand of Aussie beer. Since 1961, beer consumption as a percentage of total alcohol consumed has plummeted to 41% as of 2014 - the lowest levels on record. That is to say, that beer now makes up less than half of all alcohol consumed in Australia, and is down from a high water mark of just under 80% in the mid 20th century. In short, as of 2014 Australians were turning away from beer in droves. It was almost a national emergency.

The reduced consumption rates also coincided with a highly concentrated market, that produced beers at the economies of scale required to service historically high volumes. For the big brewers to compete in such a hostile, concentrated market - it was quantity over quality for the beer they produced. Some argue that this was the major contributing factor to the overall decrease in how much beer Australians drink, that a stagnant market of reduced quality beers drove consumption rates down. Whether or not that’s the case isn’t important now, because the Australian beer industry is changing right before our eyes.

A dramatic shift in Australian beer consumption habits is driving a growth in craft beer and breweries. The health conscious, environmentally switched-on, young, inner-city crowd are fuelling a craft brewing renaissance. The traditional staples of bars and bottle-o’s are being replaced by boutique, craft beers - and sales are skyrocketing.

As of last craft beer sales made up 9% of Australian beer sales. That’s upwards of $400 million dollars worth of craft beer. So if the overall consumption of beer in Australia is decreasing, and the market for craft beer is increasing - the logical result would be more craft breweries right?

Yeah… kind of.

This is where the story gets a little murky, and the real market forces come into play. The three major mega-brewers in Australia - SABMiller, Lion Nathan and Coopers - have begun to take notice and move in on the party.

Lion Nathan’s acquisition of Little Creatures brewery has given it the market edge in the craft beer movement, whilst ‘The Australian Beer Company,’ a joint venture between Coca-Cola Amatil (CCA) and Casella Family Wines, is launching a range of craft brews under the Yenda brand. CCA has also had success through importing the craft beer, Blue Moon, which is made in the US by Coors. Recently though, the ACCC has placed these market leaders on notice, with increasing discussion surrounding the definition of craft beer and concerns that the major brewers may be misleading consumers. But this battle is far from over.

By labelling products as craft or boutique beer, mega-brewers are attacking the unique selling point of genuine craft breweries. To further compound this, bars and pubs are being locked into tap arrangements which prevent them from offering beers outside of their major suppliers range of products. There are those within the industry who see this as clear strategy to degrade and remove craft breweries from the market, like Melbourne craft brewer Thunder Road Brewing who released a statement on the issue:

"In our view… the big two multinational brewers will keep targeting small brewers and kill off craft brewing in this country. Their approach seems to be 'buy the competition or buy the taps'." - Thunder Road Brewing

But all is not lost, yet.

The fact that major, multinational brewing companies are moving into the craft beer market is proof that Aussie craft brewers are doing something right. The shift in consumption, demand and overall market share towards these brewers and their products during a period where we as a nation are drinking less, shows the market for craft beer continues to be strong.

Looking back on our beer history, if the past 40 years has taught us anything - it’s that despite our love for beer, we know a good ale when we see it. So even with the best efforts of the mega-brewers to crowd the market with knock-off craft and boutique beers, they will always struggle to overcome the unique point of difference that sets the two apart.

True craft brewers create high quality beer using traditional techniques, with only the best ingredients to boot. It’s a search for quality, without the requirement that economies of scale bring. This return to producing quality over quantity is moving the entire market away from its traditional base. Away from multi-nationals and corporate acquisitions towards local, community driven operations.

I for one, say that can only be a good thing.