I love a good irony as much as I love a good beer and yesterday I was treated to a good one.

On the same day that Lion was announcing ‘strong brand growth’, the nation’s media was heralding the death of beer.

Kirin-owned Lion announced their Q1 Trading Update in which they trumpeted that their Beer, Spirits & Wine Australia division saw first quarter volumes increase 6.7 per cent versus the previous year. The report noted that Lion’s core trademarks also performed well with “XXXX, Hahn and James Boag in growth. Australia’s second largest beer, XXXX GOLD, also posted an impressive performance – growing volume and value share off a large base.”

Just an hour later, the country’s major media outlets starting running the latest alcohol consumption statistics from the Bureau of Statistics, with the headlines:

• Aussies beer drinking hit new low – SkyNews Australia
• Aussie beer drinking market goes flat, slumping to 65-year low – Today Online
• Beer guzzling nation no more – The Age
• Beer consumption hits a slump – Weekly Times Now

So, the Beertanic is sinking but at least Lion has the best view of the iceberg.

Of course, Lion rolled out their now boilerplate line about “Subdued consumer spending and exceptionally poor summer weather continued to impact the total beer market, with first quarter volumes declining 4.1 per cent versus the previous year” to explain that despite the volume increases, beer sales overall were down.

Fig 1.APPARENT CONSUMPTION OF PURE ALCOHOL,Per capita(a)

Given that the ABS figures show a continuous drop in beer consumption since 1991 and a strong downward trend since 1961, I’m surprised that anyone would want to live in Australia as we’re obviously an incredibly negative lot suffering through decades of terrible weather.

While media and analysts alike noted that the figures show a slight drop in alcoholic consumption overall, the ABS statistics may not actually reveal that. The total alcohol consumption figure they report, which shows a 1.1% dip in the total alcohol consumption, does not include alcohol consumed as cider in the figure. This is due to the way in which cider is taxed (see below). In an interesting conversation with an ABS spokesman this morning, I was advised that when the ABS has attempted to calculate cider consumption, most recently several years ago, it represented possibly up to .8 per cent of the total alcohol consumption. Given this calculation occurred before the current rapid cider expansion, it is possible that total per capita alcohol consumption has indeed increased slightly and that this has been represented in a move from beer, wine and/or spirits to cider.

A hidden cider-driven increase in alcohol consumption simply makes the position of beer appear worse. Of course, Lion won’t care too much. Their Tooheys 5 Seeds brand is selling its arse off…or as Lion might moreprosaically phrase it, ‘widening its brand footprint’.

Of course, a move away from mainstream lagers to more flavoursome craft and premium beers will tend to see a decline in overall beer consumption as these both represent a more expensive purchase and a more satisfying one – that is, one in which drinkers spend more but consume less which, of itself, isn’t a bad thing. However, with craft beer accounting for less than 2 per cent of the beer market the ABS figures show a flight from beer rather than a flight to quality.

WET Strikes again

An interesting fact gleaned from the ABS this morning is that the figures for beer and wine consumption are collected very differently.

Because beer is taxed volumetrically, the ABS is able to obtain a reasonably accurate figures from the Australian Tax Office about the production of beer and the relative strengths of that beer. They then just add the untaxed 1.15 per cent abv to the total and have a figure.

Wine on the other hand, which is taxed based on value and not strength, cannot be calculated in this way. Wine producers are surveyed by the ABS each year and based on these surveys a figure is calculated.

Cider, which is in the increasingly anomalous position of being included in the WET arrangements and taxed accordingly, isn’t counted as the ABS has not surveyed cider producers regarding production.

The spirits debate

Based on the ABS figures, the 2008 alcopops tax has had the desired effect on the consumption of pre-mixed spirits. After peaking in 2008 at 1.09 litres of pure alcohol consumed in this form per capita, that figure has dropped and steadied at .7 litres. However, this has been paralleled with a rise in spirits consumption from 1.18 litres of pure alcohol in 2008 to 1.32 litres in 2011. The ABS figures are silent on who is responsible for the respective decrease and increase, but a study released last year suggested that the alcopops tax had led to a reduction in teen drinking.