Why I Won’t Own a Brewpub in Australia!

Posted on July 14, 2011

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In coming back to Australia I had this grand idea of setting up a brewpub as the Aus/NZ market is pretty far behind the United States in terms of brewpub and good beers. Like most guys in the beer circle I have the grand idea of setting up a brewpub and then my wife tells me it will never happen so get back behind the computer as I’m not a brewer. Well there are some factors that help with my notion that it will never happen. In Australia there are 22 million people with the majority in cities such as Sydney (6 Million), Melbourne (4 Million), Adelaide, Brisbane, and Perth. So it is no surprise that companies want to setup bases in either Sydney or Melbourne, and that is where the work is, and yes it is expensive.We can see from the table below that illustrates that my current city Sydney is the 14th most expensive to live in the world. Cost of Living Annual Surveyby Mercer Consulting

March 2011 rank

March 2010 rank

Change in rank

Sydney

14

24

+10

Melbourne

21

33

+12

Perth

30

60

+30

Brisbane

31

55

+24

Canberra

34

74

+40

Adelaide

46

90

+44

 
“RP Data said rents for apartments fared slightly better with a 4.7 per cent rise in Sydney
for the quarter to a median of $450/Week or $1955/Month , while Melbourne’s were flat
at a median of $350. Brisbane’s apartment rents increased 1.4 per cent in the quarter to
$365/Week or $1521/month while those in Perth rose 1.4 per cent to $375″
Sydney Morning Herald

Pubs for Sale!

Do you have an extra AUD$80 Million ? you can then purchase the Golden Sheaf in Double Bay. This is not uncommon in Sydney that buildings that have pubs in them are worth tens of millions of dollars. The Hurstville Ritz  Pub is one of the most bizarre pubs, as there appears to be empty from all the times I walk past but its not, they are in the Poker Machine den! In February 2009 the pub sold for $38 Million after it was sold for $52 million 2 years prior. Well why did it sell for so much ?  the one answer is that its 8th in the State in Poker machine revenue. NSW has more poker machines per person than Las Vegas, so that is why its not exciting for me when I’m in Vegas to see slot machines.

By the Numbers – Some Key NSW statistics from Deloittes

– Poker Machines in NSW 105,500 – Registered Clubs Ex-Serviceman – have 78,000 – Hotels & Pubs – 25,000 – NSW State Revenue from Poker Machines 9.1% (via Taxes)

 Unfair Australian Tax System on Small Brewers

Without doubt the Australian Tax system is severe on most industries, whether its Mining that kept Australia relatively less effected by the recession of BEER. The major difference in costs compared to the US craft Brewing sector is in Tax per 500 litres. A post on Redbay Brewingstates the disparity for small brewers having to pay tax $700 per 500 litre batch compared to the American system of only $24 (though depends on State/State). I was aware of reading tax laws about brewing that if you produce under 100,000 litres in a year you are in a higher tax bracket. So Yes If you brew UNDER 100,000 Litres in a year, so effectively that is any craft brewer, and the only exceptions in Australia are Lion Nathan (Tooheys) and Fosters that control 85% of the Australian beer market. When drinking in the few pubs I go to in Sydney you will spend $12-15 on a pint of craft beer. Spending so much on craft beer is why it hasn’t caught on for the general population that still drink Tooheys and VB and spend anywhere from $4-6 on a beer from a bar. The other issue I realized too is that beer that is only 4-5% in alcohol you will need to consume more to get  effect, effectively spending more over the night to get drunk. Craft beer that I am used to drinking is anywhere from 6.5-8.5% and you only need a few beers in a night to be satisfied.

Light at End of the Tunnel

Without leaving the article in all doom and gloom about the Aussie beer scene, we did see Murrays Brewing arrive in Sydney a few months ago with their new bar located in Manly. Harts Brewpub in the Rocks is a cool little pub with fresh rocks brewing beer is getting busier each time I’m there, so here is hoping that the craft beer segment in Australia is starting to grow. I found Macquarie Hotel that sell their own Schwartz Beer and its just seedy enough for me to frequent that bar more often. I shy away from Trendy bars such as Red Oak, but have enjoyed beers there on a few occasions

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