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AUS: SABMiller targets beer growth from Foster's

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SABMiller is predicting volume growth of between 1% and 3% in its Australian beer and cider business in the next three to five years, but believes there is a major opportunity to turnaround the recently-acquired Foster's brand. 

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Ari Mervis, Foster's CEO and SABMiller's managing director Asia-Pacific, said yesterday (March 27) the company was “surprised” beer was not a greater share of the Australian alcoholic drinks market. Currently beer represents 44% of the market, wine 36%, spirits 13% and RTDs 7%. 

Speaking at an investors seminar in London to mark 100 days since SABMiller's acquisition of Foster's, Mervis said: “What is a little surprising is that the share of beer ... is lower than we would have thought.”

Mervis highlighted the Australian climate and a fondness for barbecues as reasons why he expected consumption to be higher. “For beer to be at only 44% of total alcohol we certainly see as ... an opportunity for growth,” he said.  

Commenting on the Foster's acquisition, Mervis said the brand has a “fantastic starting position” and the “turnaround opportunity is comprehensive”. He said Foster's had suffered previously from a lack of strategic direction. 

Mervis later warned that there is still "subdued consumer sentiment" in Australia and volume growth may not recover until the summer. 

Mike Walsh, Foster's finance director, said that the brewer believes the beer market remains “very attractive”. He said volume growth was expected to be “1% to 3% in the medium term with moderate recovery in the beer and very strong growth in the cider market.” Revenue growth was expected to be around 5% to 8%, he added. 

However, SABMiller's volumes between July and December in Australia were down by 4.5%, partly due to the “management distraction” of the takeover, Walsh said. 

"We still believe it's an attractive economy and a very developed market," Walsh added.

The company also said it will make annual cost savings of AUD180m (US$187.1m) by the end of March 2016.


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