Hotelier Jerry Schwartz adds new Sydney brewery to the mix

Meanwhile, White Bay Brewery will consolidate its own operations to its facility at Reservoir in Melbourne’s north.

The former Rich Lister said the acquisition of the heritage building at White Bay was a “great deal” and would provide plenty of upside to grow his business.

Microbreweries across the nation are facing high operating costs, forcing many smaller players out of the industry. Close to 50 small beer makers have gone bust in the past year.

The federal government’s pause on the indexation of its draught beer excise for two years, announced in March in the lead-up to the federal election, has brought little respite to the sector, according to Schwartz. The excise equates to about a third of the cost to develop and sell Sydney Brewery beer, he said.

“It has been going up in the past few years, more than CPI. So all the pause is doing is letting this amazing 30 per cent catch up to CPI,” he told The Australian Financial Review.

“For every dollar that you earn, you’ve got to pay 33 cents in excise, in addition to all your other expenses, which is, of course, the cost of making the beer, the materials, the marketing and the distribution.”

But Schwartz said he’s been fortunate to be able to distribute his beers through his own hotel portfolio along the eastern seaboard.

“You can succeed with the scalable size. So I’m lucky enough to have the distribution in 15 of my hotels and other hotels I associate with,” he said. “It’s unfortunate that the smaller players do get pushed out.”

The Schwartz Family Company is one of the largest privately-owned hotel groups in Australia with more than 4000 rooms. It includes three Rydges-branded hotels, two Ibises and two Mercures. It also operates an air charter business and runs the Canberra Craft Beer and Cider Festival each year.

The brewery side of Schwartz’s business operates sites in Sydney’s Surry Hills and Alexandria and in the Hunter Valley.

Schwartz started his first microbrewery out of the Macquarie Hotel – now called Hotel Harry – in Surry Hills. He then relocated the brewery to his Crown Plaza hotel in Lovedale, NSW’s Hunter Valley, where he established Sydney Brewery Hunter Valley.

He later developed a small brewery in his Rydges Sydney Central hotel, and last year, he purchased The Rocks Brewery in Alexandria, including all its equipment and took over the lease, renaming it to Sydney Brewery Alexandria.

With the purchase of the White Bay Brewery site, Schwartz also acquired a reverse osmosis machine which will allow him to develop a new product line of non-alcoholic and low-carb beers.

“[It] actually extracts the alcohol out of the beer so it tastes like beer, it just hasn’t got alcohol in it. So that’s a new direction we want to go in,” Schwartz said. “It’s always been a desire of mine – I guess because I’m a doctor, and I try and be healthy about it – having low-alcohol beer.”

He plans to eventually launch a range of canned water as well, called “Can Do Water” which will also include sparking and flavoured options.