The new Blutongue brewery

The new Blutongue brewery

SABMiller and Coca-Cola Amatil are looking to grab more of Australia's premium beer market after beginning brewing operations at their newly-built Bluetongue brewery.

The US$105m Bluetongue brewery has a capacity of 500,000 hectolitres and will brew a combination of domestic beers and those from SABMiller's international portfolio, such as Peroni Nastro Azzurro, Peroni Leggera, Grolsch and Miller Genuine Draft.

"This impressive facility is the first to be built by our joint venture in Australia and we are optimistic that it will enable us to make further progress in this attractive market," said Ari Mervis, the MD of SABMiller Asia.

SABMiller's joint venture with Coca-Cola Amatil, Pacific Beverages, has gained a 10% volume share of Australia's premium beer market in the four years since its formation.

However, Pacific Beverages only has around a 1% share of the total beer market, which is dominated by Foster's Group and Kirin Holdings-controlled Lion Nathan.

There has been speculation that SABMiller, perhaps via Pacific Beverages, could bid to acquire the Foster's beer business, although some analysts believe the company is more interested in organic growth in Australia.

"The new brewery allows us to provide fresh beer in the popular draft format for consumers here in Australia and will be a watershed for our business," said Pacific Beverages CEO Peter McLoughlin.

The Bluetongue brewery, based just north of Sydney, will also feature a water recycling plant, in-line with SABMiller's strategy to use water more sustainably across its business.

Recycled water will be used for general maintenance of the brewery, including wash down and cleaning, boilers, refrigeration, staff amenities and fire water top-up.