CCA moves toward Australian premium beer market re-entry

Posted by AFN Staff Writers on 23rd August 2012

Coca-Cola Amatil Limited (CCA) is moving to expand its interests in the premium beer market in Australia.

On 22 August 2012, CCA announced it had entered into an agreement to lend up to around $46 million to the Australian Beer Company, part of the Casella group. This loan is a preparatory step towards CCA’s re-entry into the Australian premium beer market and will be used by the Australian Beer Company to assist with the acquisition and expansion of a state-of-the-art brewery in Griffith, New South Wales into a 500,000 hectolitre annual capacity brewery.

CCA having recently sold out of another brewing business is currently subject to a restraint not to sell, distribute or manufacture beer in Australia until 16 December 2013. Prior to that date the Australian Beer Company will also refrain from carrying on those activities. However the loan will convert into a joint venture equity interest for CCA in the Australian Beer Company to coincide with the expiration of the restraint on 16 December 2013.

The resulting joint venture will then be responsible for manufacturing premium beer and developing brands whilst CCA will be solely responsible for the sales, distribution and development and management of customer relationships.

CCA’s Group Managing Director, Terry Davis said, “This new agreement with Casella will give CCA the opportunity to access a world class, low cost brewery which will enable us to re-enter the premium beer market in Australia after 16 December 2013 with sufficient initial manufacturing capacity to cater to approximately 15% of the premium beer market in Australia.

“CCA’s large scale sales and distribution expertise and experience, combined with the draught and packaged brewing capability of the Australian Beer Company, will provide international beer companies after 16 December 2013 with a uniquely independent route to market in Australia and the ability to partner with the leading non-alcoholic beverages and spirits partner for the licenced trade.”

John Casella, Managing Director of Casella Wines said, “Today’s agreement also marks an exciting new chapter forCasella and our expansion into the beer category.  A partnership with CCA, when it occurs, will give us tremendous scope to grow our brewing operations and we look forward to the exciting opportunities that lie ahead.”

Combined with the proposed acquisition of the Fiji brewery and distillery and multi-year distribution agreements with Grupo Modelo, Carlsberg and Molson Coors in the Pacific Islands, CCA’s strategy to leverage its sales and distribution scale into premium beer is well underway.