Brewery Space: Impact from barley prices [Australia's largest locally owned beer group, Coopers Brewery reports lower profits]

  • Nov 08, 2019 AEDT
  • Team Kalkine
Brewery Space: Impact from barley prices [Australia's largest locally owned beer group, Coopers Brewery reports lower profits]

The majority of beer sold in Australia is made in Australia, driving up the economy growth. For every direct full-time job making beer in an Australian brewery, numerous jobs are created around the economy including retailing pubs, clubs, cafes and restaurants and other retailing, packaging and agriculture etc. Beer is a naturally brewed product made out of simple ingredients including barely, hops, yeast and water. The growth for the beer industry in Australia was secured due to the fast-changing routine of people, quick urbanization, soaring disposable income, and the status of beer amongst the youth in current years. The beer industry has witnessed a fall in revenue over the past few years due to the change in climatic changes and consumer preferences. Consumers are mitigating away from the old traditional beer towards the premium and craft beers. This change is likely to increase the revenue in upcoming years.

Extreme hot spell and scarcities have damaged the global barley crop, indicating that a popular ingredient of the world’s most demanded alcoholic beverage will become scarcer. Thrilling Price rise and shortages in supply due to climate change is causing a trouble for world’s beer drinkers. Beer being a luxury good, more of the barley would be channelled towards the livestock if in case the conditions worsen and there is a further scarcity. This may not be the worst consequence but surely symbolizes a high loss. If the carbon emissions are not stopped than it is likely that the beer consumption will be falling in the most countries including China, which is one of the biggest beer consumers.

Since there is a shortage in the supply market, it is certain that the prices would take a hike. Looking at the impact of price rise, While the most affluent beer lovers will still be able to indulge in a pint or two, Future climate and pricing conditions could result in the beer out of the reach of a million people around the world and might also affect the social stability. There may be some alternative to barley, for instance, green crops. But again, anything which comes with Pros have cons also! Excessive use of same crop will reduce the soil fertility and moreover, relying on only one plant variety would make the entire stock more susceptible to disease. The best way is to reduce the climatic change and giving nature a sigh of relief. Fortunately, the awareness for the climatic change has been increased and people are pledging to save energy

Let us take a sneak peek on how Australia's largest locally owned beer group, Coopers Brewery is performing!

Cooper Brewery

Cooper Brewery is an Australian owned brewery, known for making a variety of beers. The Company provides products which includes ginger, draught, stout, and wheat beers.

Coopers Bolsters its Brewer Ranks:

The company has boosted the number of skilled and certified brewers amongst its ranks with seven more employees earning international qualifications, bringing the number of qualified brewers at Coopers to 13, making it perhaps the most technically qualified brewery in Australia per litre of beer produced. The company has encouraged its employees to broaden their technical skills and knowledge with the introduction of advanced manufacturing processes and the entrance of new products and styles into the market.

Coopers new management structure:

The company has restructured its senior management, early this year in order to drive the company’s growth. The changes include the appointment of a General Manager and the recruitment of a National Marketing Manager. These changes are done to provide further support to the Managing Director of the company and to provide effective and efficient engagement with customers. The future of the company took a step forward as Coopers have also looked into the next generation with Louise Cooper joining the firm, as Legal Affairs and Risk Manager.

Coopers Brewery profits drown as barley prices shoot!
  • The Managing Director of the company, Tim Cooper said that the company’s bill for barley, which is used in the brewing process had rocketed up by $2 million in 2018-19. The retail pricing of packaged beer absorbed the extra costs to beer producers of new Container Deposit Schemes, laying an additional pinch on margins.
  • The jump in prices of barley and the pressure on margins from a competitive market has resulted in lowering the profits by almost 30%. The company have recently announced that the NPAT (net profit after tax) for the year ended 30 June 2019 has declined from $34.3 million to $23.1 million and Net profit after tax dropped by 31% to $16.4 million from $23.9 million a year ago. The changing sales mix with some segments showing declines in retail pricing worsen the condition.
  • Coopers have about 170 shareholders including the family and the descendants and have claimed that the volumes of beer were still solid, with an increase by 2% in its home market and 2.9% in Victoria. The sales volume of the company went up by 2% to 76.8 million litres owing to the launch of Coopers Original Pale Ale in cans. The popularity rose due to the rise in the gains made by smaller craft brewers in the beer industry.
  • The company has also invested $68 million on a new maltings plant in 2017 at its brewery in the Adelaide industrial suburb, which is running on a full capacity. Higher interest costs associated with this plant were also a hindrance on profits. But total sales of malt more than doubled to 44,300 tonnes, with the group selling to about nine different outside customers in brewing, distilling and the food industry.

No wonder, the Australians are struggling against the beer market and rising barley prices. The drinkers have also shifted in the craft beer brands and prompted the acquisitions.


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