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Dirty work Down Under

Added: Thursday, January 31st 2013

An open letter to SABMiller's Australian CEO, Ari Mervis.

Dear Mr Mervis,

I have an issue that I would like to raise with CUB about the marketing of one of its products. I recently received a media release from your public relations agency. It was a gushing tale of a small little brewery making great beer in a little northern New South Wales town called Byron Bay. When I read the media release, it seemed to be strongly suggesting that the beer was being brewed and bottled by the Byron Bay Brewing Company. Without an intimate knowledge of the Australian beer market, anyone reading the media release or seeing the beer's packaging would be very surprised to learn that the beer is actually being made, marketed and distributed by Carlton and United Breweries, albeit under licence. 

The way that your company is marketing this beer at the very least lacks transparency. At its worst, it could appear that your company is actively seeking to hide your involvement from the consumer. I think that the marketing of this beer is damaging to your company's image and to the wider beer market. I regularly have spirited discussions with the staff of brewing companies, including CUB, many of whom I count as my friends. I am often told, "beer is a unit cost game" and "this is a business where scale matters". And indeed it is and it does. A company such as CUB enjoys many competitive advantages over Australia's small breweries due to your size. 

In the Australian beer market, cost is an important factor influencing the purchasing decisions of many beer drinkers. Your company is extremely well placed to produce high quality beer at a competitive price, not to mention to distribute and market your beers very effectively. This includes the many craft brands that you produce, such as those from the excellent Matilda Bay Brewery, that are well placed to capitalise on the growing ranks of consumers who are interested in exploring the world of more flavoursome craft beers. 

However, in growing your business to the size to benefit from such scale, you have also left a large number of consumers behind. You would appreciate that there is a small but growing number of consumers for whom, whether consciously or not, buying from small and regional breweries is an important part of their purchasing decision. A number of small breweries have sprung up on the basis of satisfying this demand. These breweries do not enjoy the benefits of scale, of marketing and distribution networks, of large public relations consultancies, of the financial resources needed to negotiate commercial arrangements to ensure their  beers are poured in certain premises, of multi-million dollar ad campaigns and of the brand recognition that comes with these things. Often the only advantage they have is being small and having an interesting story to tell. 

As strange as it might seem to the CEO of a multinational company, being small is their only competitive advantage. As the CEO of a large company that spends millions registering and enforcing your trademarks, I am sure you will understand how important it is that your identity is clear in the market place. I am certain you will appreciate, then, that when you produce beers such as Byron Bay Pale Lager and market them in the way that doesn't disclose your involvement, it makes it hard for consumers to identify what it is they are purchasing. While they are still purchasing a high quality product, it's not necessarily what they think they are buying. 

No doubt this is why you trademark your own bottles, labels and brands: to protect your brand from businesses trying to pass themselves off in the market place and to trade off your intellectual property. While being small and independent isn't trademarkable, I am sure you appreciate the principle. When you present this beer in a way that presents  it as being simply the product of a small, regional brewery, you risk misrepresenting what it is. The SABMiller website proclaims the "high standards of ethical behaviour and transparency" that underpin all that your company does. It says that you communicate in an "open and honest way with all your stakeholders". Given the high ethical standards that SABMiller promises, I am sure you will agree that when you market your products in a way that can mislead consumers, it is a breach of the high ethical standards that you set. Such practices can only fuel the cynicism that many consumers already feel about multinational brewers and also unfairly hurt the brewers who make up a very small but vibrant part of the Australian beer market. 

This is not a call not to make the beer. It is a call to be transparent and to clearly label your involvement in the brewing and marketing of your beer, both on the packaging and in your marketing communication communication so that beer drinkers can make informed decisions. If, as I am regularly told by your staff, beer drinkers really don't care who makes their beer, then you lose nothing by making your involvement in the brewing and distribution of this beer clear. It is already industry practice with international brands brewed under licence, surely it's appropriate to do so when you licence brands locally. There can be no harm in ensuring that beer drinkers can make an informed choice about what they are buying, can there? It is in the interests of both the Australian beer consumer and fair competition in the Australian beer market. 

You have recently loudly proclaimed a willingness to apologise and fix it when CUB has made mistakes, even at great cost to your company. I would ask you to acknowledge that there is an issue here and to fix it. Yours sincerely,

Matt Kirkegaard
Editor,
Australian Brews News

 
matt kirkegaard