Foster’s struggles to re-build its sales volumes following SABMiller takeover

Posted by AFN Staff Writers on 26th November 2012

Formerly the largest-selling Australian beer in the world, the Foster’s brand has continued to suffer despite the optimism for improved sales that were anticipated in Australia after the South African brewing giant SABMiller’s $12.3 billion takeover last year.

Falling sales and higher Australian costs, and the servicing of high debt levels, were amongst reasons for added pressure on the Foster’s beer division.

SABMiller reported last week that Foster’s sales fell 13 per cent in the latest quarter, impacting on overall SABMiller earnings due to “increased commodity costs.” The half-year profit results showed that lager volumes were down 8 per cent with the exclusion of Corona, Stella Artois and Asahi contracts lost by SABMiller.

Overall, SABMiller’s earnings before interest, taxes and amortization was up 17%, despite “adverse currency movements and increased commodity costs, enhanced by the inclusion of Foster’s.”

Chief operating officer Alan Clark said that SABMiller’s increased prices were aiding the goal of annual cost savings of $180 million, to reduce finance costs driven by Foster’s-related debt.

“Our synergies and revenue has led to improved profitability in the business and has offset the impact of the volume decline,” Mr Clark said.

SABMiller said that the company was making “good progress” in Australia to strengthen the brand portfolio and commercial trading relationships with Coles and Woolworths, although it was noted that “adverse trends” were affecting the Australian beer market as a whole.

Mr Clark remained hopeful that market share would stabilise in 2013.