Foster’s loses lucrative Corona licence
The move had been expected but it still came as a surprise when Mexican brewer Grupo Modelo, the parent of Corona Extra, abruptly terminated its contract with Foster’s as of 9 March 2012.
According to Australian media, Grupo Modelo told Foster’s, now owned by SABMiller, that it was exercising a "change of control" provision in its contract, which allows the Mexican brewer to end its agreement with Foster’s.
Although no reason was given, we are safe in assuming that Grupo Modelo’s shareholder AB-InBev, which has 50 percent non-controlling stake in the Mexican brewer, did not feel comfortable with the idea of having Corona under the wings of its competitor SABMiller.
The promiscuity of global brewers, when it comes to brewing each others’ brands, is a well-known fact, but seems to have its limits.
Kirin-owned Lion, the number two brewer in Australia, has secured the rights. Lion already distributes Corona in the New Zealand market.
Coca-Cola Amatil (CCA) has repeatedly said they would love to have the Corona licence but an agreement with SABMiller, CCA’s former joint venture partner in Australia, prevents CCA from re-entering the beer market before 2014.
Around 600,000 hl of Corona Extra were sold in Australia in 2011 compared with the overall beer market of 18 million hl.
Those in the know say that Corona contributed about AUD 100 million to Foster’s pre-tax profits.
Recently, the Foster’s Group lost the rights to Japanese beer brand Asahi. It still retains the distribution rights to SABMiller’s brands including Peroni Nastro Azzurro, Peroni Legerra, Miller Genuine Draft, Grolsch Premium Lager, Bluetongue and Pilsner Urquell.
Attention will now turn to the Kronenbourg and Carlsberg licencing agreements, with insiders suggesting these will also flee the Foster’s stable soon.
SABMiller said in a statement on 9 March 2012 that its expected financial returns from the Foster’s takeover would be broadly unchanged. Even if factored into SABMiller’s purchase price, the losses will hurt.
