The recent attempt by Asahi Breweries of Japan to buy P&N Beverages has led Ray Rowlands of Drinksinfo Ltd to delve into the bedrock of the current ownership status of Australia’s beverage industry with some startling results.

Invented in the 1920s, Vegemite, the vegetable extract equivalent of Marmite, is widely regarded as a true Australian icon, as true blue as kangaroos and budgie smugglers. It even received a mention in a popular Australian chart-topping song. But, I wonder how many Aussies are actually aware that the trademark is currently registered with Kraft Foods, the US multinational. Indeed, this is just one instance of an Australian symbolic product falling to foreign investors. Arnotts Biscuits (e.g. Tim Tams) is another example.

We are just seeing the tip of the iceberg here. Overseas ownership, whether overt or covert, has a stronger hold over the Australian way of life than many - perhaps most - people realise. Lets look a little closer, focusing in on the 'Australian' beverage industry.

As in many other countries, the Australian CSD market is closely controlled by two multi-nationals – The Coca-Cola Co and PepsiCo - both hailing from the US. Their brands hold an estimated 60% share of the Australian CSD category. Coca-Cola products are bottled by Coca-Cola Amatil (CCA) in which Coca-Cola holds around a 30% stake. PepsiCo brands are handled by Schweppes Australia. In early-2009, Schweppes Australia was acquired by Asahi Breweries of Japan, yet another overseas investor. Both CCA (e.g. Kirks) and Schweppes (e.g. Passiona) have CSD brands of their own. When the brands of all four entities are added together they easily represent three quarters of all CSD volume sold in Australia. Thus, less than a quarter of the market can truly be called 'Australian'.

Turning to the bottled water category, again Coca-Cola (with Mount Franklin) and CCA (with Pump) enjoy leading positions though, to be fair, the market is pretty fragmented. Schweppes also features, as does P&N Beverages (with Frantelle), the company that has recently hit the headlines over yet another foreign takeover bid. Moving across to the water cooler market, CCA has a very definite controlling influence here having acquired Neverfail, Australia’s largest water cooler company, in late-2003. It then tightened its grip on the market even further in 2006 when it bought second-placed Palm Springs.

In sports drinks, Coca-Cola (with Powerade) and PepsiCo (with Gatorade) face little local competition. These two foreign brands are basically the market. Meanwhile the energy drinks category is confidently in the hands of V (from New Zealand but now owned by Suntory of Japan), Red Bull (Austrian) and Mother (Coca-Cola again).  

Berri has dominated the juice category since the late-1980s, with company brands estimated to account for around half of all commercial juice volumes. Of the remainder, Golden Circle products occupies second place. In all, these two companies control 60% or more of the domestic juice market. But, let us just look at the actual ownership of these two giants.

In 2004, a 50% stake in Berri Ltd (as it then was) was sold to San Miguel of the Philippines. In 2005, San Miguel then bought National Foods, which I will come to later. Then, the following year, San Miguel announced that it had acquired full ownership of Berri through National Foods. However, San Miguel then undertook a strategic rethink and decided to sell off National Foods, now incorporating Berri. But, it did not revert back to national ownership, instead it was sold to leading brewer Kirin Holdings of Japan in 2007.  Meanwhile Golden Circle had been suffering financially leading initially to the global investment and advisory firm Babcock & Brown investing a reported AUD50m in 2005. Unfortunately the financial problems did not abate and the company was sold to the US-based Heinz company in 2008.

So, like so many other soft drink categories, the bulk of the Australian juice market is definitely no longer in local hands. But, what about other beverages? We have already looked at the acquisition of National Foods, first by San Miguel of the Philippines then subsequently by Kirin of Japan in connection with Berri Ltd. But, National Foods beverage interests are not isolated to juice and juice drinks: Far from it. National Foods is also a leading dairy company, probably best known for its Pura milk brand. It got even bigger in 2008 when it bought Australia’s second largest fresh dairy company Dairy Farmers, so even a large chunk of the Australian dairy market is under overseas control.

Kirin has also held a keen interest in Australia’s beer market and for a number of years held a minority stake in Lion Nathan. This share was increased to 46% in 2008. Then, in April 2009, Lion Nathan announced that terms had been agreed for Kirin Holdings to acquire all its remaining issued shares. But. Lion Nathan is only the second biggest brewer in Australia. Even after it acquired fourth-placed J Boag & Son in 2007, its volume market share still amounted to under 50%. The leading force in the Australian beer market is still Foster's Group, an Australian public-listed company. At least, it is at the moment, but maybe not for much longer. The international drinks giant SABMiller is rumoured to be launching a raid on Carlton & United Breweries, Foster's brewing arm.

I am not saying that this scenario is restricted to Australia nor that foreign ownership is necessarily bad. Sometimes a company needs international investment in order to overcome financial limitations. It can, for example, provide superior R&D, technological support and managerial expertise plus access to new markets. However, it is saddening when a company, or even a country, loses its individual identity in the process of globalisation.