CUB not likely to be sold by AB-InBev

Are they beginning to see the beauty of a high profit stream? With Australia’s beer consumption in decline, it was understood late last year, after the takeover of SABMiller, that the new owner AB-InBev would embark on a dual track process to sell SABMiller’s USD 10 billion Australian beer unit CUB (formerly Foster’s), either through an IPO or a trade sale, with the Japanese company Asahi and private equity firms the most likely buyers.

What could have been AB-InBev’s reasoning behind the alleged sale? Well, the market is certainly not growing, so why bother with dead capital?

But a divestment of the local operation is now seen as less likely, especially after a surprise visit by AB-InBev’s CEO Carlos Brito to CUB on 18 March 2016.

From what has percolated down to the troops, he assured headquarters that there would not be an imminent sale and the takeout was that CUB would be operational for at least the next few years in its existing three breweries.

SABMiller acquired Foster’s in December 2011, re-branding it Carlton & United Breweries (CUB) in July 2012. CUB is Australia’s second largest brewer, with a 39 percent share of the beer category and beer sales of about 7 million hl.

AB-InBev has no direct market presence in Australia, but some of its beers such as Corona Extra, Stella Artois, Beck’s and Budweiser are sold locally by Lion, which in turn is owned by Japan’s Kirin.

At the recent IBD conference in Sydney, Lion’s Managing Director James Brindley told delegates that the licences for these brands will go back to CUB. He acknowledged that CUB would reclaim its place as Australia’s number one brewer. He said: “We are currently the largest brewer in Australia […], but only for a few more months; the crown […], or I can say in Spanish, the Corona, one of the largest brewers, is going to pass back to CUB.”

The Corona brand is the country’s fourth biggest selling beer.

The Australian Competition and Consumer Commission is still investigating the AB-InBev-SABMiller merger and its impact on Australia’s beer industry, which on a per-hl-basis is one of the most profitable world-wide. The anti-trust watchdog will announce its findings on 14 April 2016.