AUS: Foster's quits brewing in Asia

Foster's Group has quit brewing in Asia after selling its assets in Vietnam and India.

In two separate deals, the Australian drinks giant has offloaded its business in Vietnam to Asia Pacific Breweries for US$105m and sold its brewery and the rights to the Foster's brand in India to SABMiller for US$120m.

The transactions come five months after Foster's hinted it was looking to sell its brewing assets in Vietnam, India and China after deciding returns were no longer enough to compete successfully with rival global brewers in those markets.

In June, Foster's sold its operations in China to Japanese drinks group Suntory for an undisclosed sum.

Foster's CEO Trevor O'Hoy said the company had struggled to "generate adequate value" from the Foster's brand overseas.

However, he said that over the last four months, the company had earned over A$ (US$761m) from the sale of its brewing businesses in Asia and the sale of the European rights to the Foster's brand to Scottish & Newcastle.

Foster's will remain the owner of its namesake brand in Vietnam, O'Hoy said, but had entered into a licence agreement with APB. The Singapore-based brewer has also bought Foster's two breweries in Da Nang and Tien Giang.

"The Foster's brand has significant potential to expand in Vietnam, given its relatively low current market share," O'Hoy said.

Koh Poh Tiong, APB's chief executive, added that the Foster's brand would benefit from growing demand for premium beer in Vietnam.

In India, SABMiller has bought the rights to the Foster's brand and the company's brewery in Aurangabad. O'Hoy said the price SABMiller paid for the Indian assets "far outweighed" the potential value to keeping the Foster's brand or striking a licence agreement in the fast-growing beer market.

He added: "The opportunity for us to continue to grow the brand profitably from a small production and distribution base, in a challenging market structure, was limited."

For SABMiller, its deal with Foster's means it has strengthened its presence in a market where it is the number two player, holding around 31% of the market.

André Parker, MD of SABMiller Africa and Asia said: "With SABMiller's extensive footprint throughout the subcontinent, complemented by Foster's share of Maharashtra and the important Mumbai market, India remains a principal growth market for SABMiller."