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Entries in CUB (1)



In what has come as a shock to nobody, Australia's once-independent Bluetongue Brewery has been shut down.

Based on the New South Wales central coast, Bluetongue carved a niche as one of Austraila's first non-mainstream beers (even if mainstream was exactly how its beers tasted) in a debut that gave a hint that Australians were bored with mass-market domination and were ready for the craft beer wave they're currently surfing.

But the writing was on the wall when Coca-Cola Amatil sold its 50% stake to give its once-partner, SAB Miller, 100% ownership of the company. SAB Miller was just swallowing its purchase of the Foster's Group and Bluetongue's 64 staff and 100 million litres of (frankly over-rated) "premium" pilsner per year were no longer essential items.

Bluetongue started life when four Hunter Valley businessmen started it in 2003, then sold a 50 percent share to larrikin Australian adman, John Singleton, in 2005. That lasted until 2007, when they all sold out to the Coca-Cola Amatil/SAB Miller joint venture, but the future looked reasonably secure because it commited the funds to build a new brewery at Warnervale only in 2012.

Now, former Australian Competition and Consumer Commission deputy chairman, Alan Asher, is questioning SAB Miller's motives for closing the brewery, slashing 64 jobs from a town, less than 100km from Sydney, with less than 1000 inhabitants. 

Mr Asher has inferred the closure was more about big multinationals killing off local competition than it was about sensible ongoing business strategy, but SAB Miller insisted it had no choice.

SAB Miller argues it had to close the brewery because it found too much duplication and excess brewing capacity after it took on Foster's - and in Beeriosity's view, any capacity to brew Foster's could automatically be considered too much capacity.

But Mr Asher believes there is more to the decision, insisting Bluetongue had been a success story with a great future.  

"It isn't closed because it was a failure or because people didn't like it; it's been closed because a giant global firm, the tenth-largest on the UK stock exchange and the second-largest brewer in the world, finds it convenient to snuff out this tiny speck of a potential competitor," he told Australia's ABC.

The second largest brewery in New South Wales, it will have its equipment and about 15 employees relocated to Foster's Yatala plant, itself the former home of an upstart brewer, Power's, which showed up both Lion Nathan and CUB in the 1990s by claiming 14 percent of the Queensland beer market before being bought by CUB.

SAB Miller made Coca-Cola Amatil sign a two-year, non-compete clause when it bought out the soft drink giant's share, but that clause has now lapsed and Mr Asher insists Bluetongue has been close down to stop CCA from using it to re-enter the market.

"What we are seeing here is CUB disposing of all of those assets to remove an obvious way of Coca Cola getting a leap-frog back into that market," he said.

"It's reminiscent in a way of the struggles over the years as small supermarkets were sucked in by Coles and Woolworths."

The Bluetongue brewery is slated to be closed by the middle of the year and even the brand won't survive, with CUB corporate affairs director Jeremy Griffith confirming it is set to be phased out this year.

"Bluetongue was put in the CUB portfolio up against VB and Carlton Draught. It just wasn't getting the cut-through, it wasn't getting the consumer buy-in," he said.

"We weren't seeing significant volumes, so we had to make a commercial decision after a period of time whether we would continue to invest in Bluetongue or continue to invest in VB and Carlton Draught and given the huge brand equity in both VB and Carlton Draught, Bluetongue unfortunately just wasn't getting the cut-through."