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Global hop market

A local alternative to mass beer suggested by independent brewers has been successful and is now altering the global market. Beer is becoming more diversified, so transnational companies have to accept the new game rules and to switch focus to young and fast growing markets. All these processes increased the demand for aroma and bitter hop as well as their acreage expansion on two continents. However now there appeared a downward trend of alcohol consumption in the world, so even special sorts can soon turn to be sufficient. In this connection the dynamic American hop market is already facing some problems. EU hop producers have become more cautious, they are not racing to exceed the demand and look forward with more confidence, judging by the contract terms. 

Hop Market in Russia

Germany still dominates the Russian market, yet over the recent two years one has been able observe a continuous success of Czech hop suppliers. Their expansion and growing popularity of hops from the United States became the drivers of supplies growth in 2016 despite the preceding modest harvest crop in the EU, as well as the factor of relative stability in 2017. In this connection, in 2017, the ratio of the varieties continued to shift towards the aroma ones, and the supplies of Magnum hop and other alpha varieties were reduced. However, the import of bitter hop pellets is partially replaced by extracts, especially from the major beer manufacturers. Total volumes of alpha acid supplies, according to our estimation, decreased by approximately 5% and returned to the level of 2015. Barth Haas Group continues dominating the hop products market; HVG also increased its weight. At the same time, Morris Hanbury significantly reduced the supplies in 2017.

Foster’s board unanimously recommends shareholders reject SABMiller’s offer

Foster’s board unanimously recommended its shareholders to reject SABMiller’s offer, the company said in a statement on Monday. SAB Miller Plc had announced its intention to make a takeover offer for all the shares in Foster’s Group Limited at a price of $4.90 per share in cash reduced by the amount of any dividend or distribution paid or declared by Foster’s after 17 August 2011. Foster’s declared a dividend of 13.25 cents per share on 23 August 2011, therefore SABMiller’s offer price is now only $4.7675 per share.

Foster’s board believes the offer “significantly undervalues” its company. The offer is also highly conditional and subject to significant uncertainty, the board said.

David Crawford AO Chairman wrote in a statement to Foster’s shareholders:

“Your Board believes strongly in Foster’s future.

  • Foster’s is an iconic Australian beverages company with market leadership in both the beer and cider categories. Foster’s has an outstanding portfolio of brands, including Victoria Bitter (number 1 regular beer), Carlton Draught (number 1 draught beer), Crown Lager (number 1 domestic premium beer), Corona (number 1 imported beer) and Strongbow (number 1 cider brand).
  • The demerger of Treasury Wine Estates has allowed Foster’s to return to being a dedicated beer and cider business. The longer term benefits of the demerger have not yet been realised.
  • Foster’s has continued to strengthen the capability and depth of your management team. Chief Executive Officer John Pollaers and his experienced team have put in place a robust strategy to bring Foster’s to its full potential. Significant progress has been made and the business turnaround is on track.
  • Foster’s has announced a phased program of cost reduction building on its existing cost leadership. The first phase is forecast to deliver approximately $55 million of annual benefits by the end of fiscal 2013. A second phase of initiatives – to be finalised in the coming months – is expected to realise additional benefits in fiscal 2013 and beyond.
  • Foster’s has provided shareholders with strong dividend returns and your Board expects the dividend payout ratio to remain at least 80% of net profit before material items.
  • Foster’s successfully concluded its long running Ashwick litigation in 2011, resulting in a total cash benefit to shareholders of approximately $835 million (via a combination of the cash refunds received, and receivable, from the Commissioner of Taxation and reduced income tax payments in future years).
  • Excellent cash flow generation and a low level of net debt provides Foster’s with the flexibility to invest for future growth and conduct disciplined capital management. As an example of this, your Board has determined to return at least $500 million to shareholders in fiscal 2012 by way of a capital reduction or share buyback, subject to market conditions.”

15 Sep. 2011



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