Tied Houses, Taxes, and Technology: Concentration in the Brewing Industry of New South Wales, 1882 to 1932

Abstract

The brewing industry in New South Wales reached its numerical peak of about eighty breweries in the 1880s, and then declined to five breweries by the 1930s. Three of these, controlled by two firms, supplied virtually the whole state. This numerical ebb represents a process of industry concentration, driven by the necessity to maximize efficiency through economies of scale. This article examines increased concentration through cost pressures which encouraged it, and transport and other improvements which facilitated it. The former included: restrictive licensing, licence reduction, and diminishing demand, and the consequent need to tie hotels to secure markets; the colonial beer duty, the federal beer excise, and related government supervision; and the introduction of new technology to the brewing industry to satisfy changing fashions. Accompanying its numerical decline went a spatial contraction, the result of market expansion by Sydney breweries, facilitated by rail transport and by improvements in the chemical stability of beer.