Cider has “bucked the trend” to become one of Australia’s top export industries despite a dip in alcohol consumption across Australia, according to a research released this week by IBISWorld.
Australia’s burgeoning cider industry has been brewing up a storm over the past five years, recording 11.4% growth across the sector to be turning over $309.7 million in revenue this year.
Nearly all the big headway in this growth has come from small craft ciders and small businesses who have capitalised on Australia’s changing drinking culture.
The IBISWorld research draws on figures from the Australian Bureau of Statistics, which says despite a 14% drop in total alcohol consumed over the past five years, total cider consumption in Australia has more than doubled.
And it doesn’t look like stopping any time soon, with IBISWorld predicting revenue will grow at 5.5% over the next five years to $404.4 million by 2021.
“Over the next five years, the number of industry enterprises is expected to continue innovating, creating new flavours and marketing techniques to maintain its trendy appeal,” the report said.
Australians’ changing drinking habits
South Australian-based The Hills Cider Company, also known as The Hills, was one of the craft brewers at the forefront of the local cider movement, launching on Australia Day 2010.
Founder and General Manager Steve Dorman says he didn’t set out to change the landscape, he just wanted to brew “really good cider.”
“[The Hills] was born of my desire to get a drink in Australia made by Australians and supporting Australian farmers,” says Dorman.
After returning from Europe I ordered cider over the bar in Adelaide and they only had flat, concentrated Chinese ciders,” he told SmartCompany. “It was awful.”
Dorman says The Hills, and cider in general, has had a “brilliant” five or six years, and the local industry continues to go from strength to strength.
Dorman says a lot of cider’s strength over the past half-decade has to do with a changing drinking culture in Australia, but he believes there’s more to it than that.
“People are becoming more conscious of what they put in their body. Cider is gluten free, it has no added sugar, no added preservatives, no concentrates, it’s just fruit in a bottle,” he says
“It has less alcohol as well, so instead of having one at dinner, you can look at having two ciders.”
Craft cider brewers well-placed to meet demand
According to the IBISWorld report, the Australian cider industry has also benefited from over-the-bar sales at venues, instead of being locked into the “supermarket war” that beer and wine has been dragged into, while less brand recognition and a desire to pay for quality brews have helped keep profits in the sector healthy.
While larger brands such as Somersby, Strongbow and Bulmers continue to maintain market share, IBISWorld senior analyst Andrew Ledovskikh, says the larger brands are not primed to take full advantage of the growth.
“Small businesses are main area for growth, larger businesses have distribution models overseas already, but smaller businesses have the biggest scope for improvement,” he says.
“Consumer tastes are expected to continue shifting towards locally-produced premium products from craft cider breweries in Australia. As a result, imports are expected to decrease.”
Australian exports of cider are expected to increase by over 25% over the next five years off the back of these smaller enterprises sending their brews abroad.
However, Ledovskikh says Australian cider faces structural challenges that need to be overcome before our craft drinks can take over the world.
The two biggest are economies of scale, with many brewers producing batches that are too small to export without an export agent sending drinks abroad in batches, and Australian cider producers’ penchant for using glass bottles, which makes a brew more expensive to export.
However, The Hills has had no trouble expanding overseas, according to Dorman.
“We’ve got a strong focus on exports. We send cider to Hong Kong, to Singapore, to Papua New Guinea; we’ve just signed a big contract in Japan, to New Zealand and to the UK.”
He ships bottles all around the world, but there is demand for cans in the UK, which The Hills tries to satisfy as well.
“We’ve got great product awareness in the UK,” he says. “It’s all about networking and finding the right partners.”