Adios Foster’s, I’m a Coopers Drinker Now

By The Noble Contrarian on November 8, 2011 in Other

Actually, I’ve predominantly been a Coopers man for a number of years – it’s simply better beer. Occasionally though, when catching up with old school mates at the Wellington RSL, I’ll switch to New or Carlton so they don’t think I’m an Eastern Suburbs wanker (any more than they already do).

But I wonder what percentage of beer drinkers are aware that foreign brewers will soon control more than 90% of Australia’s beer market? Lion Nathan is owned by Japanese brewer Kirin, Foster’s is about to fall into the hands of South African giant SABMiller and Coca-Cola Amatil’s pre-emptive deal means it will also sell its share of Pacific Beverages to SABMiller for more than $300m.

VB, Carlton Draught, Pure Blonde, Crown Lager, XXXX, XXXX Gold, Tooheys New, Tooheys Dry, Cascade, Boag’s, Bluetongue – and almost all of the other big brands. It’s an incredible turnaround from being almost 100% locally controlled in 2008. My suspicion is that awareness of foreign control of the beer market is currently very low.

Personally, I’m a bigger fan of good beer than nationalism, but wonder if the matter might be important to a large number of beer drinkers were they to find out? Expect to see some clever marketing raising awareness and testing the theory once the Foster’s deal closes.

Coopers, which unfortunately isn’t listed, has a great opportunity to pitch itself as the leading Australian-owned brand. If the company hasn’t spent the past few months thinking about this approach, I’d be astounded.

Small listed brewers like Little World Beverages (makers of Little Creatures and White Rabbit brews) and Gage Roads also have an opportunity to push the Australian-owned angle to their advantage. Retailers Woolies and Coles, eager to continue eroding the dominance of Foster’s and Lion Nathan, are likely to support the push, but only subtly (given that most of the beers they sell are now foreign owned).

Small boutique brewers already had a wind in their sails. Australians are drinking less beer per capita than at any time in the last 60 years, but the boutique and craft beers have been the one booming part of the market. The growth had all been coming to the detriment of Foster’s, which saw its market share drop from almost 60% to 50% over the past decade (in my opinion, Foster’s shareholders have done very well out of the SABMiller takeover – the foreigners will have their work cut out justifying the price paid).

Unfortunately, from a stock market perspective, neither Little World nor Gage Roads look compellingly cheap. Little World’s shares trade hands for 24 times last year’s earnings and Gage Roads hardly makes a profit, despite its $20 million price tag.

But the Foster’s takeover is a potential turning point, an opportunity for small brewers to get a strong patriotic wind behind a sector already sporting plenty of momentum. It’s going to be very interesting to watch this industry change over the next few years and these two stocks are worth keeping an eye on.

In the meantime, if you see me at the pub, make mine a Coopers.