Coke looks set to follow up on beer market

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COCA-Cola Amatil has given its strongest signal yet that it will push back into the beer market after selling out of its Australian joint venture with global brewing powerhouse SABMiller.
Chief executive Terry Davis said yesterday that he still saw a significant role for the company in brewing, despite an agreement that requires the group to stay out of the market for two years.

Mr Davis said he expected CCA would take up its right to buy Foster’s mixed drinks, spirits and soft drinks businesses under a deal struck with SABMiller in June.

The deal is conditional on SABMiller winning regulatory and shareholder approval for its $10.8 billion takeover of Melbourne-based Foster’s.

CCA is expected to pocket more than $300 million for selling its half-stake in Pacific Beverages to SABMiller.

Under the deal, the group would have to hand over the NSW brewery that produces and distributes in Australia the Bluetongue, Peroni and Miller brands.

Mr Davis confirmed CCA would pay about $200 million for Foster’s non-beer brands, including the Cougar and Black Douglas labels and Cascade soft drinks.

The only beer asset CCA would keep is Foster’s brewing operations in Fiji.

Mr Davis signalled New Zealand could be a launch market for what would ultimately be a fresh assault on the Australian beer market when the two-year period was up.

“I’m passionate (about manufacturing in) Australia rather than have it made somewhere else, so that would be my aim – to start off in distribution but ultimately to be a manufacturer.”

Foreign beers that Foster’s presently manufactures in Australia include Carlsberg, Corona – owned by Mexican beer giant Modelo – and Stella Artois, owned by the world’s biggest brewer, Anheuser-Busch.

Both foreign giants are rivals of SABMiller but Foster’s is confident it can keep the Corona contract even under the ownership of the Anglo-South African giant.

Mr Davis said CCA would be well positioned to compete in the beer market in two years.

“That’s a long time to wait, but what we do know is the international brewers will be looking for alternative forms of distribution and we think we offer that,” he said.

“If you’re an international brewer, you have to ask yourself: why would you want your competitor to sell your brands in another country?”