AUSTRALIA: Foster's Restructures North American Beer Business for Growth
Following the exit of Molson from the US distribution company, Molson USA, Foster's has negotiated a new joint venture partnership with Miller, to strengthen the marketing, sales and distribution of Foster's in the US.
Under the terms of the new partnership, Foster's receives an increased equity holding in the restructured joint venture with Miller, to be known as Foster's USA LLC, in exchange for its interest in Molson trademarks in the US.
The new joint venture agreement with Miller will deliver to Foster's:
- an increased stake in the new US marketing, sales and distribution company, Foster's USA, formerly known as Molson USA, up from 24.95% to 49.9%, to form a partnership of equals with Miller;
- greater strategic and operational direction over the Foster's brand in the US via a new licence agreement with Miller;
- increased investment on marketing the Foster's brand in the US with the annual spend set to more than double from current levels;
- two profit streams out of the US via royalty payments and earnings flowing from Foster's USA; and
- equal voting rights and representation with Miller on the Foster's USA management board.
Profit from the Foster's USA joint venture is not expected to be materially affected despite Foster's USA stepping up its investment in marketing to grow the Foster's brand for the long term.
Foster's Brewing International Managing Director, Mr Richard Scully, said, "The new Foster's USA partnership will see the marketing spend on the Foster's brand significantly increased, giving the brand the support and drive it needs to continue its climb towards becoming the leading premium import brand in the US."
Miller Brewing Company Senior Vice President Corporate Strategy and International, Mr Richard Strup, said "All the indicators tell us Foster's is a very hot brand - it has achieved 60% growth in the past five years and is one of the most profitable beer brands in the US. Increasing the focus and investment behind the brand will enable the Foster's USA joint venture to capitalise further on this impressive success."
In addition to the Miller partnership, Foster's has also signed new licensing agreements with Molson, affecting the production, marketing, sale and distribution of Foster's in Canada. A new long-term agreement for the production of Foster's for export to the US has been put in place, as well as a new licensing deal which will see substantially increased commitment by Molson to the marketing and distribution of the Foster's brand in Canada. As part of the licensing agreement the marketing spend on the Foster's brand in Canada will increase five-fold.
Mr Richard Scully said, "Foster's is a key brand within Molson's premium brand portfolio. It has a strong following in Canada and we are confident Molson's renewed commitment to marketing the brand will translate into increased sales of Foster's."
"The new agreements are a win for all parties involved. We have enjoyed long and successful relationships with both Miller and Molson and we look forward to working with them to achieve our mutual goals in the future.
"North America is a key market for Foster's and as the largest and most influential consumer product market in the world we have long believed that if we are successful at building brand equity in the US, it will have a flow-on effect to other parts of the world.
"In particular, the new agreements with Miller and Molson position us well to meet the marketing needs of Foster's going forward and will help us to sustain the strong growth trajectory the Foster's brand has experienced in North America and globally," he said.
Foster's Brewing Group (ASX:FBG) is Australia's premium global beverage company dedicated to delivering quality beer, wine and spirits products to consumers in more than 150 countries. Foster's makes and markets many of Australia's most famous beers, including Foster's Lager and Victoria Bitter, as well as some of Australia's best known wine labels such as Wolf Blass, Black Opal, Greg Norman Estates and Yellowglen. The recent addition of Beringer Wine Estates, a leading US premium wine producer, added an excellent range of premium brands to the Foster's wine portfolio, including Chateau St. Jean 1996 Cinq Cepages cabernet sauvignon, which was selected as Wine of Year in the 1999 Wine Spectator 'Top 100'.
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