AUSTRALIA: Foster's warns of fall in beer growth

By Chris Brook-Carter | 21 September 2000

Foster's Brewing Group has indicated that the growth rates for its Carlton & United Breweries have been cut. The company blamed a static beer market and fierce sector competition.However, Foster's cited other potential areas of growth, including the expanding wine division. The flat outlook for beer and the increase in competition, especially with Lion Nathan, was one of the reasons for Foster's recent $2.6bn acquisition of US wine company Beringer.CUB's Australian beer sales fell 0.6% in volumes to 9.65m hectolitres, while EBIT moved ahead by only 0.8% to A$384.6m in 1999-2000.Beer volumes in Australia across the whole market are only growing about 1% a year. Foster's, in its annual report released yesterday, said it was not possible, under these circumstances, to match the EBIT growth rates of 10% seen in previous years.CEO Ted Kunkel also said that the cost of doing business had risen, due to higher marketing costs as a consequence of the competitive nature of the sector.But despite the weaker outlook, the company's annual report, released yesterday, showed that Kunkel collected a salary of A$2.28m in 1999-2000, up from A$2.07m the previous year. This also included a A$333,500 bonus.

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Foster's Brewing Group has indicated that the growth rates for its Carlton & United Breweries have been cut. The company blamed a static beer market and fierce sector competition.However, Foster's cited other potential areas of growth, including the expanding wine division. The flat outlook for beer and the increase in competition, especially with Lion Nathan, was one of the reasons for Foster's recent $2.6bn acquisition of US wine company Beringer.CUB's Australian beer sales fell 0.6% in volumes to 9.65m hectolitres, while EBIT moved ahead by only 0.8% to A$384.6m in 1999-2000.Beer volumes in Australia across the whole market are only growing about 1% a year. Foster's, in its annual report released yesterday, said it was not possible, under these circumstances, to match the EBIT growth rates of 10% seen in previous years.CEO Ted Kunkel also said that the cost of doing business had risen, due to higher marketing costs as a consequence of the competitive nature of the sector.But despite the weaker outlook, the company's annual report, released yesterday, showed that Kunkel collected a salary of A$2.28m in 1999-2000, up from A$2.07m the previous year. This also included a A$333,500 bonus.

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