More brands to leave Foster’s
It’s like a mass mutiny. First Stella, then Asahi and Corona, now Carlsberg. One by one, Foster’s is being deserted by foreign brand owners. The latest ones to leave the Foster’s stable are Carlsberg and Kronenbourg, both owned by the Danish Carlsberg Group.
In 2007 Carlsberg and Foster’s signed a licensing agreement for the production and distribution of both the Carlsberg and Tuborg brands, which previously had been with Independent Distillers, a beverage company now owned by Asahi. The agreement between Foster’s and Carlsberg was renewed in December 2010 and called "long-term" (What is long-term? Two years and a bit?)
At 40,000 hl of volume sales per annum, the Carlsberg brand qualifies as a low-volume brand compared with Corona, of which Foster’s last year sold 700,000 hl (600,000 hl direct plus 100,000 hl parallel imports). Moreover, it’s priced as a mainstream brand at under AUD 40 a carton (24 bottles). Premium brands retail at over AUD 50 per carton.
Why Carlsberg has decided to call it quits with Foster’s, following its takeover by SABMiller late last year, is anybody’s guess. Could it be that international brewers tend to behave like lemmings? Blindly follow everybody else?
In view of the fact that Australia knows only two major brewers – Foster’s/SABMiller and Lion/Kirin – Carlsberg and Kronenbourg as well as Guinness have had to learn the hard way that their options for distribution are rather limited. Once they bid Foster’s adieu, it’s either the international corporates, Lion and Asahi, or the privately-owned Coopers Brewery.
Obviously, Lion’s portfolio of international brands is now rather crowded with the recent AWOLs from Foster’s. Lion now brews or distributes the AB-InBev brands Budweiser, Beck’s and Stella Artois, Grupo Modelo’s Corona Extra and Heineken.
With a sighed "if we must", Lion would probably accept the Carlsberg and Kronenbourg brands into its fold but would these brands get the attention they deserve ... or, rather, need? Anybody taking on Carlsberg would have to re-position the brand as a premium brand, that is, raise prices even at the risk of losing volume.
Still, Coopers Brewery from Adelaide has been widely tipped as Carlsberg’s new partner. Coopers has also expressed an interest in the import brands.
At the time of writing, Carlsberg had not made an announcement.
Coopers Brewery already has an agreement with Carlsberg. It manufactures the non-alcoholic Birell brand, originally from Switzerland. Last year Coopers began brewing Sapporo beer at its Regency Park brewery in Adelaide.
In September 2009, Coopers ceased distributing Budweiser through its distribution arm Premium Beverages after a six-year agreement when Anheuser-Busch was taken over by Belgian brewer InBev.
Coopers also distributed Grolsch from late 2007 until May 2008 when the Dutch beer company was taken over by SAB Miller.
Despite the recent desertions, SABMiller recently said that it targets 1 percent to 3 percent annual growth in beer and cider volumes in Australia in the next three to five years. That’s a challenging target, especially since the Australian beer market has basically been flat and growth in the premium segment has been to the detriment of the mainstream segment.
The irony of all this swapping around of brands is that SABMiller thought that with Foster’s they had bought a market leader, whereas a few months into their acquisition they are landed with a number two brewer only. Purely numerically speaking, if you add the volume that has "fled" from Foster’s to Lion’s current volume, Lion has already become the number one brewer by volume without much ado. Apart from opening its arms to the defectors.
Sometimes all it takes is a little bit of luck.
