After 113 years, the country’s biggest selling beer, Victoria Bitter, or VB, is to be produced in a mid-strength version to keep pace with the country’s fast-changing beer tastes.

VB, with its distinctive green label, has since 1894 been a staple of hard-drinking backyard barbecues, student revels and football games, not to mention healthy overseas exports.

Now brewer Foster’s has decided for the first time to produce the beer in a weaker yellow-label version with 3.5 per cent strength, down from 5 per cent, as Australians abandon it for scores of more upscale "boutique" or craft beers.

"The change has been dramatic. The drinking habits of Australians have been changing over time and what we have found is that the markets in growth are the premium and mid-strength markets," Foster’s Brand Manager Felicity Watson told Reuters.

Mid-strength and boutique beers are the new darlings of Australia’s $A5.5 billion beer industry, with 12 per cent annual growth against flat sales for mainstream beers.

New boutique breweries including Cascade, Boag’s and James Squire have won huge followings in most city pubs, while so-called microbreweries such as Little Creatures, Mountain Goat and Blue Tongue have lured drinkers away from VB in droves.

"There is just a lot more choice and consumers are no longer attached to just one or two brands," Watson said. "They will have a different brand for different occasions, if you’re out with a group of friends and you want to impress."

In April, boutique breweries in the state of Western Australia demanded the government provide them with tax breaks enjoyed by the country’s global wine industry to help them grow further.

Hundreds of craft breweries are opening and aiming to rival small European makers, turning Australians away from traditional lagers and on to more complex beer styles.

Watson said the new yellow VB would be backed by a $A35 million advertising campaign.

"We think the competition is a positive thing to be honest, because what it means is there’s a lot of interest in beer," she said.