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Coca-Cola Amatil sees 'enormous potential' in Foster's beer and spirit Bounty

By Ben Bouckley , 07-Sep-2012
Last updated on 07-Sep-2012 at 17:00 GMT

Coca-Cola Amatil (CCA) has completed the acquisition of Foster's Fiji Business for A$58m by buying a holding of around 89.6% in Foster's Group Pacific Limited (FGPL), and aims to launch Fiji Bitter and Bounty Rum brands in Australia by the end of 2013.

Assets include FGPL's two breweries in Suva and Lautoka, as well as associated facilities in Fiji and Samoa, and the Bounty Rum distillery in Lautoka.

Coke bottler and food and beverage manufacturer CCA plans to invest A$15m ($15.59m) to upgrade and expand the facilities, allowing them to produce premium export quality beer and spirits.

‘Enormous potential’ in brands

Terry Davis, CCA group MD, said of the acquisition: “We are delighted to acquire those businesses and the fantastic brands of Fiji Bitter and Bounty Rum, which are Fijian icons.

“With the scale and expertise we are able to bring to the business, we strongly believe they have enormous potential to be developed into high quality export brands with a potential global market.”

Davis said the two brands would complement CCA’s non-alcoholic beverages businesses in Fiji, Australia, New Zealand, across the Pacific and further afield.

CCA said today it did not now intend to make offers to acquire the balance of shares (10.4%) in FGPL, with any such share acquisition subject to approval by the Reserve Bank of Fiji; FGPL will retain its headquarters in Fiji and its listing on the nation's stock exchange.

Premium beer cheer

After SAB Miller’s A$12.9bn takeover of Foster’s in December 2011, CCA sold its 50% stake in lucrative JV Pacific Beverages to partner SAB. The deal stopped CCA selling, distributing or manufacturing beer in Australia until December 2013.

But MD Terry Davis said at the time of the stake sale (for AUS $305m) that CCA hoped to re-enter the Australian beer business by 2014, describing premium beer as an “attractive growth opportunity”.

The SAB deal also handed CCA the right to buy various Foster's assets following the takeover: its Australian spirits business, a Fijian beer and rum business and a non-alcoholic drinks division, primarily the Cascade non-alcoholic adult soft drinks brand in Australia.

We understand that CCA passed over the Australian spirits assets after conducting due diligence earlier this year, since it did not regard the brands as sufficiently strong (given a meaningful decline over a couple of years), and SAB had to pay CCA a A$34m break fee as a result.

But CCA got permission from the Australian Competition and Consumer Commission (ACCC) to push ahead with the Cascade acquisition on August 14, and this transaction is rumored to be days away from completion.

The Cascade effect...

Despite the fact that Cascade is a small brand, CCA sees its presence licensed channels as a good fit, given its growing presence in this space, while it doesn't currently possess a strong adult non-alcoholic beverage in its portfolio.

Coca-Cola Amatil made another significant step towards re-entering the Australian premium beer market on August 22, after announcing plans to lend JV the Australian Beer Company (ABC) A$46m.

ABC forms part of the Casella group, and Coke bottler and food and beverage distributor CCA said the loan was a first step towards re-entering Australia’s premium beer market.

Davis noted a beer EBIT pool of around A$1.4bn across the Pacific region (with major players SAB Miller/Carlton United Breweries and Kirin representing A$800m and A$500m respectively).

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