Comment - Soothing Voices from SABMiller and Coca-Cola Amatil for Pacific Beverages

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It would appear that SABMiller's troops have been ordered to stand down for the time being. Developments in Australia yesterday (21 March), regarding the brewer's Pacific Beverages joint venture with Coca-Cola Amatil, would suggest that SABMiller won't be making a move for Foster's Group's brewing division any time soon.

When Coca-Cola Amatil (CCA) and Beam Global Spirits & Wine announced yesterday that the two have signed a ten-year “incentive-based” agreement regarding Beam's spirits brands in Australia, my mind started to race. After all, Pacific Beverages, formed almost five years ago as a sales and distribution venture for SABMiller and CCA, has handled Beam's brands in the country since 2006. Surely, moving this side of CCA and Beam's relationship (CCA already produces Beam's RTD portfolio in Australia) away from Pacific Beverages signals the opening gambit of the endgame for the JV?

This would make sense to those who feel that SABMiller is sniffing around Foster's Carlton & United Breweries division. What use would Pacific Beverages be to SABMiller, were it to snap up Australia's largest brewer? And, with SABMiller's CEO, Graham Mackay, suggesting last year that the company has run its eye over CUB, then Pacific Beverages' days do, indeed, appear numbered.

But, bear in mind the following, and you – like me – may conclude that SABMiller isn't as keen as some people would like to think, to buy up CUB.

Firstly, last month, CCA's managing director, Terry Davis, moved to calm the growing noises around Pacific Beverages.  “There are certain investment bankers in this country that like to beat up stories," he said. "There are no changes and there have been no changes to our joint-venture arrangement with SABMiller, full-stop. So those investment bankers that are trying to beat up some business - we've seen that not just this year but in previous years - good luck to them.

"In terms of what we do in the marketplace,” he continued, “we look forward to our alcohol business growth for years to come, and I can tell you that we are very very very comfortable with our joint-venture agreement terms.”

Then, late in the day yesterday, both SABMiller and CCA told me that they remain satisfied with their joint venture. Speaking from Australia late last night, a spokesperson for CCA said that its relationship with SABMiller in Pacific Beverage is “ongoing”, and pronounced the company “happy with how premium beer in Australia is growing organically”.

SABMiller, meanwhile, said that “both sets of shareholders in the JV remain invested and committed to it”.

"The production of spirits has never been part of our Australian JV,” SABMiller's spokesperson continued, “so this deal will now bring the manufacturing and distribution aspects of the Beam Global portfolio together. This will enable the JV to focus on its beer portfolio, which is consistent with our area of expertise."

This, for me, is the clincher. Pacific Beverages was initially set up to target the premium beer market in Australia. That CCA tried spirits sales and distribution within Pacific Beverages, and then found a more practical alternative, isn't enough to suggest that the JV's wheels have come off. Beer, as SABMiller said, is its and the JV's area of expertise.

So, calm yourselves, folks – that includes me, too.

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