Fosters Group will soon be up against Coca-Cola Amatil in its home market

Foster's Group will soon be up against Coca-Cola Amatil in its home market

An analyst has downgraded SABMiller's rating as the brewer's recently-acquired Foster's Group looks set to face tougher competition in Australia.

In a note released today (23 August), Nomura changed its advice from 'Neutral' to 'Reduce', blaming expected weaker margins by the end of the year. The analysts also said yesterday's announcement by Coca-Cola Amatil to enter the beer market will put further pressure on the underperforming Foster's unit.

SABMiller bought the brewer last year but has revealed that lager volumes in Q1 fell 13% at Carlton United Breweries, the Australian drinks arms of Foster's.

Nomura said its cautious view was confirmed by Heineken's first-half results yesterday, which reported higher input costs and foreign exchange fluctuations.

“In addition, price/mix appears to have been weak in Central and Eastern Europe, exacerbated by growth in discount channels,” the note said.

The long-term outlook for SABMiller remains attractive, Nomura said, adding that Anheuser-Busch Inbev's recent acquisition of Grupo Modelo makes a further bid for SABMiller by the rival brewer unlikely.