Illustration: John Shakespeare.

Illustration: John Shakespeare.

It is no coincidence that as beer consumption hit a 66-year low in 2013, the country's two biggest beer companies are offering big bucks for the exclusive right to sell their products at sporting events and tie up the draught beer taps with their beer at pubs and clubs.

It is a practice that has gone on for years, but as the supermarket chains continue to grow in power and Australians increasingly switch their drinking habits from mainstream beer to wine and craft beer, the stakes are getting higher and a few craft beer owners are cranking up the complaint volume.

The reason is simple. Lion and CUB, which together control 90 per cent of the market, had previously focused on their mainstream brands and offered a variety of incentives to clubs and pubs for exclusive mainstream rights on up to 80 per cent of the taps.

The more products sold, the bigger the upfront payments, rebates and volume discounts. In some cases they even paid for the installation and maintenance of the beer taps.

Fast forward to today and Lion and CUB, which have watched their market share fall over the years, have moved into the craft beer market and between them own three of the biggest craft beer businesses, James Squire, Little Creatures and Matilda Bay.

The upshot is they are starting to offer a variety of incentives to clubs and pubs to snare up to 100 per cent of the beer taps, offering their mainstream and craft beer products, rather than up to 80 per cent in the past.

While craft beer represents less than 10 per cent of the estimated $12 billion beer market, it is growing at 13 per cent a year at a time when mainstream beer is going backwards.

Another changing dynamic in the beer industry is Coca-Cola Amatil, which has just re-entered the beer market with the recent expiry of a non-compete clause that prevented it producing and selling beer in Australia.

CCA has a joint venture with Australian Beer Company, which includes a 500,000-hectolitre brewery in NSW, equivalent to 15 per cent of the premium beer market in Australia.

CCA sold a big chunk of its alcohol business to SABMiller and as part of the deal, it had to keep out of the market until December this year.

Rumours are rife that it is mapping out a new alcohol strategy that includes looking at ways to work with Coopers Brewery, signing up some international beer brands for distribution, doing private label beer for customers and working with pubs to offer micro-beer on tap.

The reality is beer is still one of the most branded products around and while it has been declining on a consumption per capita basis for the past decade - falling last year to its lowest per capita consumption levels in 66 years - big brands such as VB, Carlton Draught, XXXX Gold and Toohey's still command a lot of dollars.

For this reason, the big two are not about to give up on their brands. Lion is owned by Japan's Kirin and CUB is owned by the London-based SABMiller, which is keen to extract value after spending more than $10 billion buying CUB in 2011.

They also will fight tooth and nail to maintain their margins. A former industry executive says strategies such as sending publicans VB vending machines (that dispense cold VBs while playing the VB jingle) or signing exclusive deals with pubs and clubs, and more innovative incentive packages, will increase over time as they are aimed at trying to diversify the big two's distribution away from the supermarket chains, which together control more than 60 per cent of the packaged liquor market through stores such as Dan Murphy's, First Choice, BWS, Liquorland and Vintage Cellars.

Last year one of the big brewers invited a group of publicans to New Orleans for the Super Bowl and a drink fest to send a message to the rest of the industry that there were rewards for being a valued customer.

Given the on-premise beer market is valued at more than $5 billion and the margins are higher than bottled beer, it is no surprise this has become the new battleground.

Whether this is misuse of market power is a question the competition watchdog, the ACCC, plans to investigate. To this end it kicked off the year with a letter that includes a list of questions to brewers designed to paint a clearer picture of the economics and structure of the wholesale draught market.

Some of the complaints against the big brewers reveal a complicated sales channel strategy designed to boost sales and increase market share.

There is nothing wrong with a company trying to grow. What is being called into question is how they use that market strength to achieve growth.