A proposed $5 million expansion to the XXXX Brewery in Queensland, will add large scale production capabilities for hard seltzers and other ready-to-drink (RTD) alcoholic beverages, Lion says.
For almost 145 years, the XXXX Brewery has produced some of Australia’s most well-known beers, including XXXX, Hahn, and James Squire.
The move to add hard seltzers and RTDs to the iconic site reflects the changing channel mix in the alcohol market.
Research firm IRI said the Australian hard seltzer market grew 282 per cent in 2021 to become a $210 million category. It now accounts for 16 per cent of the light RTD category.
Recent data from Roy Morgan shows Australian consumption of RTDs (including hard seltzers) is at an all-time high, while beer consumption fell 2.3 per cent.
Roy Morgan CEO Michele Levine said, “The emerging trends suggest consumption of wine and spirits looks set to return to pre-pandemic levels while RTDs, and hard seltzers in particular will rise in significance, while beer consumption continues its long-term decline.”
XXXX Sales director Patrick Donohue said, “The beer and alcohol beverages market continue to evolve, as do consumers’ tastes and preferences. It is important that we innovate and set the brewery up for long-term success.”
In IWSR Drinks Market Analysis’s first Hard Seltzer Report in December 2019, it forecast the hard seltzer market would triple by 2023, drive the RTD category, and be the fastest-growing alcohol beverage category.
Donohue said Lion would produce its seltzer brands at the site, which would include starting domestic production of White Claw.
In 2020, Lion signed a deal with the owner of White Claw, Mark Anthony Brands International, to import, market and exclusively distribute the beverage in Australia from October 2020.
Since then, more than 16 million cans have been sold, with 11.4 million cans sold between October 2021 and February 2022.
According to Lion, White Claw is the top selling hard seltzer in Australia and worldwide, holding a 34 per cent share of the category in Australia. One in three seltzers sold in Australia is a White Claw, Lion said.
IWSR COO for the Americas Brandy Rand said: “The rise of hard seltzers shows there was a segment of consumers underserved by the current beverage alcohol market who were looking for alternatives that were refreshing and flavourful, but also low-calorie and low sugar.
“These products also meet the growing consumer demand for convenience, and appeal to people that enjoy popular cocktails like the vodka soda, and wine spritzers.”
The diversification for Lion allows the brewery giant to better meet changing consumer tastes, broaden its portfolio for different drinking occasions, and counter softening or declines in other categories.
Meanwhile, the expansion plans are complex.
“Mass production of seltzers and RTD beverages requires bulk ethanol storage, and so we will lodge a development application with Brisbane City Council in the coming weeks to build a new facility on the current site to ensure we are doing this in the safest way possible.
“This represents a significant investment in the site and builds on our decade-long registration under state planning laws protecting the existing use of the brewery from encroachment from otherdevelopment, which was extended in 2019,” Donohue said.
As part of Lion’s application, community consultation will begin later this year.
