Lion’s acquisition of the Fermentum Group is set to go ahead after the Australian Competition and Consumer Commission (ACCC) said it wouldn’t reduce competition in the market.
ACCC commissioner Stephen Ridgeway said initial concerns were that the acquisition would remove a large independent brewer, which had the ability to expand and compete against Lion and Asahi, from the market.
The deal was announced in September and is reportedly worth more than $500 million.
The ACCC analysed if competition would significantly reduce after the acquisition due to Fermentum’s well-known flagship brand Stone & Wood.
“However, our investigation concluded that a wide range of alternative independent craft beers will remain available in the market even if the transaction goes through,” said Ridgeway.
Fermentum was created by the founders of Stone & Wood brewery, which is based on New South Wales Far North Coast and launched in 2008. The Fermentum portfolio includes Two Birds, Fixation, Little Drago and Sunly Seltzer, as well as Stone & Wood.
With Lion’s craft-style brands generally being perceived as mainstream and Fermentum’s products tapping into a higher price range, the ACCC determined the two brands do not compete closely.
No concerns of strong competition were raised during the ACCC’s large number of market inquiries with customers, competitors and industry bodies. The regulatory body also considered if restricted access to beer taps in hospitality venues or shelf spaces at liquor stores would be a result of the acquisition and hinder growth for independent brewers.
Ridgeway added that independent brewers have been able to increase their presence in venues and stores due to a growing consumer demand over the past five years.
“We also know from speaking to a wide range of venues, particularly those in metropolitan areas, that they typically reserve one or two taps for independent brands,” he said.
The ACCC determined that Stone & Wood would no longer classify as an independent brewer after the acquisition, allowing other independent brewers to take those taps.
Concerns of product ownership were raised by market participants which said beer packaging made by the major breweries may lead to confusion.
Ridgeway said consumers should carefully read the label or ask the server to confirm if the beer is independently made.
