UPDATE: AUS: Foster's "absolutely committed" to flagship brand
Foster's Group has said it remains "absolutely committed" to its flagship lager despite selling the full rights to the brand in Europe, Russia and parts of the CIS.
The Australian drinks giant announced today (11 April) that it had sold the Foster's brand outright in those territories to Scottish & Newcastle in a GBP309m (US$538m) deal.
S&N has held the licence on the Foster's brand in the UK, Ireland and parts of Europe since 1995. Under that agreement, S&N paid the brand's owner, Foster's Group annual royalties, which in the year to 31 December 2005, amounted to GBP15m.
However, a Foster's spokesman in Melbourne told just-drinks that the company had merely moved to free itself from an agreement that had "shackled" its ability to grow the brand in other markets.
He said: "We're both getting what we want from this agreement. S&N is free to develop the brand the way it wants to. What we're getting is a one-off payment that is good from a revenue point of view but also leaves us free to develop the brand in the rest of the world."
The sale of the full European rights to Foster's comes as the company weighs up the long-term future of its international brewing business. The company is looking to sell its brewing operations in a number of Asian markets after returns fell far short of expectations.
Nevertheless, the Foster's spokesman dismissed claims that the deal marked the first step towards the company giving up the brand entirely. He also said that Foster's would not be looking for a similar deal in the US, where it has a licensing agreement with SABMiller.
"It's a very different situation - we don't have the same in perpetuity agreement. In other parts of the world, our agreements are more market-based," he said, adding that Foster's was "pretty happy" with its relationship with SABMiller.
The spokesman said Foster's would now concentrate on growing the brand in "some of the fastest-growing regions" in the world. He declined to comment on the possible sale of Foster's Asian brewing assets, which are understood to have attracted the interest of the world's brewing giants.
SABMiller is understood to be interested in Foster's assets in India and Vietnam, while S&N was said to be looking closely at the operations up for sale.
However, S&N chief executive Tony Froggatt said today that the UK's largest brewer was not considering an acquisition of Foster's businesses in Asia.
"This is something we're not thinking about at this time," said Froggatt during a conference call.
"(Europe) is the area that we really wanted," he said. "We have enough on our plate here in terms of opportunities so we'll stick with this for the moment."
Under the agreement announced today, S&N has bought the rights to the Foster's brands in the whole of Europe, Turkey, Russia and parts of the CIS, including Armenia, Georgia and Kazakhstan.
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