Modelo’s exports seen at risk from SABMiller’s takeover of Foster’s

As soon as SABMiller’s offer was on the table, analysts began to speculate on the future of Grupo Modelo’s fast-growing export sales to Australia. Currently, Foster’s imports and distributes Corona Extra Down Under. Should Foster’s change hands, Modelo may have to look for another distributor, analysts at Credit Suisse reckon.

"SABMiller does not have a good experience in growing someone else’s super-premium brands in a core market and may not want to pay up for Corona earnings that can walk out the front door," analysts Larry Gandler and Carlos Laboy wrote in a report.

"What are its (Modelo’s) break-up clauses with Foster’s in the event of a change of control at Foster’s? For Modelo, it may need a new distributor in Australia."

Modelo declined to provide details about its distribution deal with Foster’s. In 2010 Modelo signed another multi-year agreement with Foster’s, extending their 19-year partnership.

It is believed that Foster’s sells about 400,000 hl of Corona Extra in Australia, making the brand Australia’s number one premium imported beer.

Analysts estimated that Corona represents more than 5 percent (or AUD 45 million) of Foster’s EBIT.