Dear Sunday Star Times Editor

Dear Sunday Star Times Editor

Thanks for running the article “Pub turf war has small brewers in a froth over the two big players” by Esther Harward - Sunday Star Times on Sunday 29th August 2010 about the situation regarding the small breweries battle trying to get their beer on in bars and restaurants against Lion & DB’s anti-competitive practices.

I and my fellow craft brewers appreciate the opportunity to get “the little guys” side of the story out there. Well done.

I am a little upset with the end of the article where it just seems that you were trying to balance the story, which is fair enough, getting both sides of the story is good reporting. But you have just taken the surgically constructed statements from the corporate affairs spokes people of two large brewers.

I would like to challenge you to actually review and quantify just what was written. Let’s deconstruct the statements I am talking about.

“Lion Nathan's spokeswoman Judy Walter said 70% of the beer sold in New Zealand was in supermarkets or liquor outlets, so craft brewers were talking about a very small part of the market.”

I think people would initially read that the key point of this statement is “a very small part of the market”

Let’s quantify that. 70% sold in supermarkets and liquor outlets. Therefore we are talking 30% of the market is on premises (bars and restaurants) which is what the article was about. So good, we’re on topic.

But what does this “very small part of the market” look like in litres? I’m just going to use some very top level round numbers, to keep this simple.

Total beer market approx. 300 million litres. 30% (the very small part, which is bars and restaurants) lets call that 100 million litres.

Since Lion made the statement lets look at how much that means to them? Lion produce 150 million litres per year. So this “very small part of the market” is around 2/3 of their total annual production.

I think the Lion Nathan spin doctors won that round, they have marginalized the small brewers position and made the reader take their eye off the ball. If it is a very small part of the market then I guess they aren’t going to be too worried if they lose a little to the small brewers.

Let’s look at DB’s strategically constructed statement, these guys are good too.

DB's spokeswoman Jo Jalfon said “consumers drank what they most enjoyed.”

What they most enjoyed? Well if you only have one breweries beers available, and they are all lagers coming from one or two wort streams (basically the same beers with a different label, and slightly tweaked for colour, sweetness and bitterness), i.e. no real choice, then I guess you have to chose something if you want a beer.

Consumers aren’t buying what they enjoy in bars, they are buying what is available – BIG difference.

Maybe when Judy Walter said it was a “very small part of the market”, she was referring to how much money the 30% contributes to the profit of the company at the end of the year. This is probably due to the fact that they have to spend so much to keep these bars tied. 30% contributes a “very small part of the profit” which they send back to Lion’s Japanese owners Kirin.

So a little disappointed in your reporting there, but at least the story has been broken. It is a starting point for discussion and debate.

As for the statement from the President of the Brewers Guild David Cryer

“… described it as a "turf war" but said drinkers had enough choice. He said the two big breweries contributed to the craft beer range though their Mac's (Lion Nathan) and Monteiths (DB) brands.”

This statement definitely does not represent the opinion of the majority of the Brewers Guild members. Perhaps Mr Cryer was misquoted? As a founding member of the Brewers Guild I will also be addressing this directly with that organization.

Lion & DB do not want this information in the public forum. They exert pressure to try and keep people from speaking out – often effectively. They come off with their “PR” answers instead of actually explaining to the public why/how they effectively limit the New Zealand beer drinkers choices and why at most bars & restaurants you will only find green bottled lagers.

I think the NZ public would be appalled if they knew the truth of what the now Japanese owned (Lion) and Dutch owned (DB) companies have been doing in our market to keep their duopoly over the “little NZ guys” and limiting their choice.

Also it was brought to my attention that this article was to run the previous Sunday, but obviously through some pressure and coercion the newspaper caved to the influence of some parties, and ran it post Beervana and NZ Beer Awards for political reasons

I am not as worried about when it ran, as I am worried that the media can be influenced this way.

Thanks again for getting this story out.

Regards
Luke Nicholas

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