The Tied House Hotel System

The way our hotels operate today is a relatively modern concept. Being able to walk into any bar and order a West End or Victoria Bitter wasn’t possible just fifty years ago. For much of South Australia’s history, hotel ownership and beer supply were tightly controlled, a system that also limited competition, with only one new brewery opening in the state between 1940 and 1985.

When South Australia was first founded, many entrepreneurial settlers opened taverns and freely imported beer, wine, and spirits from Europe. Each publican chose what to stock based on what they thought would sell best in their establishment.

However, as the brewing industry grew, some breweries realised they could maximise profits by owning their own hotels. These became known as tied house - hotels that sold only the beer produced by the owning brewery. In country towns, where there were often only one or two hotels, this created a captive market. Locals had no choice but to drink the beer supplied by the tied brewery, securing that brewery’s business and limiting the opportunity for competitors to enter the market.

A Tied House hotel was one that sold beer from only a single brewery. For example, if you walked into the Edinburgh Castle Hotel around 1900, you would find only South Australian Brewing Company beers on tap, no competitors’ products. This system also made it nearly impossible for interstate breweries to sell draught beer in South Australia, as they would have had to buy or build their own hotels in order to do so.

The Tied House model originated in England, where county breweries owned most of the local hotels, effectively blocking outside brewers from entering their markets. The same idea quickly took hold in Australia. From the 1870s onwards, as the larger breweries grew, they began purchasing successful hotels and tying them exclusively to their own beer.

Smaller breweries, unable to afford or acquire hotels of their own, often went bankrupt. In many cases, when these smaller breweries did close, larger competitors purchased them purely for their hotel holdings rather than for their brewing operations.

By the 1890s, the system had created an effective monopoly. Most of South Australia’s smaller breweries had disappeared, and just ten large breweries controlled nearly all of the state’s hotel trade. The problem was serious enough to draw government attention, leading to several official inquiries into the tied house system. In 1890, the Brewer’s Monopoly Bill was introduced to parliament, though it ultimately failed to deliver any meaningful reform.

Tied houses were not unique to South Australia, the same system operated across every Australian state. But due to the strong influence and lobbying power of the major breweries, it persisted well into the 20th century.

In 1974, the Trade Practices Commission moved to outlaw all tied house arrangements in Australia. However, legal appeals by Tooheys and Tooths Breweries in New South Wales delayed enforcement until 1979. Once the law finally passed, hotels were free to sell beers from multiple breweries, opening the door to interstate competition and greater consumer choice.

In recent decades, a new and subtler form of the tied house model has begun to re-emerge. Some breweries now offer discounted kegs to hotels that agree to sell only their products. This practice has made it harder for smaller craft breweries to secure tap space, especially in metropolitan hotels.

Today, the dominance of tied houses is less visible but still exists in a different form. Only two major companies now control most of Australia’s beer market:

• Asahi Beverages, which owns VB, Great Northern, Carlton, Melbourne Bitter, Cascade, Pirate Life, Balter, and brews Peroni under license.


• Lion, which owns West End, Tooheys, Hahn, XXXX, Little Creatures, James Squire, and Boag’s,
  and brews Heineken and Guinness under license.

While consumers now enjoy more brand variety than ever before, much of the beer landscape remains effectively “tied” not by ownership of pubs, but through corporate control and distribution power.