Comment

Comment - SABMiller: No Sign of a Foster's Turnaround

Most popular

What does the future hold for Champagne? - Focus

just-drinks meets Beam Suntory CEO Albert Baladi

The just-drinks analyst returns

just-drinks speaks to Beam Suntory CEO - Part II

Lift our heads out of our drinks - Trends

MORE

Six months in and there's still no joy for SABMiller in Australia.

//i2.aroq.com/1/sabmillerfosters.jpg

Despite a steady Q1 trading update today, the brewer revealed that lager volumes fell 13% at CUB, the Australian drinks arms of the Foster's group it acquired in December. That comes off the back of a 4% drop in last Q4 and a 6% drop the previous quarter.

So, what gives?

For the general beer category, it undoubtedly remains tough Down Under. Total sector volumes have been flat for the last 20 years and the amber nectar is losing market share to other categories, notably wine, and even within its own category.

The increasingly pan-global popularity of craft beers is happening in Australia, where microbrewers are stepping up their ambition, helped by recently-introduced tax breaks.

But, craft beer still only represents 2% of the market, so it's nothing for big brewers to worry about for now. Even so, SABMiller has its own craft beer brands in the country, with Fat Yak and Matilda Bay.

Analysts Nomura, however, suggest things won't get better for the overall beer category anytime soon. "We believe consumer sentiment in Australia remains soft, with beer losing share to other alcohol, and we do not expect a near-term rebound in volumes," it said in a note today.

SABMiller pointed out that the termination of some of its licensed brands and a rise in trade stock levels were also to blame for the performance. Stripping out these effects, the group said its volumes were down 8%, only "marginally" behind the market as a whole. 

"Subdued consumer sentiment" is also adding to its Australian woes.  

But strangely, despite the performance, the brewer says it is making "good progress with syngergy delievery" and plans to stregthen Foster's "brand equities" and "retail engagement". 

Writing in April, just-drinks' managing editor Olly Wehring suggested it was too early to be putting the boot in to SABMiller, bearing in mind it had only had the keys to Foster's for four months. But the clock has ticked on since then and management and shareholders will be wanting to see a return on their investment soon. 

In May, analyst Martin Deboo at Investec Securities said that Foster's will be "a reasonably long job to turn around as it is relatively unusual of SABMiller to acquire business leadership in a mature market". 

He's not wrong. 


Related Content

Boston Beer, Dogfish Head merger - Squeezed middle seek safety amongst themselves - Comment

Boston Beer, Dogfish Head merger - Squeezed middle seek safety amongst themselves - Comment...

How the global beer category will face the growth challenges of the future - Comment

How the global beer category will face the growth challenges of the future - Comment...

Is cannabis M&A in US craft beer a life raft or an exit strategy? - Comment

Is cannabis M&A in US craft beer a life raft or an exit strategy? - Comment...

Is craft spirits approaching a reset moment? - Comment

Is craft spirits approaching a reset moment? - Comment...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?