Foster’s Group was ‘undermanaged’ for number of years – SAB Miller CFO

By Ben Bouckley

- Last updated on GMT

Related tags Molson coors brewing company

Foster’s Group was ‘undermanaged’ for number of years – SAB Miller CFO
SAB Miller CFO Jamie Wilson admits that the firm has suffered volume declines with Foster’s Group in Australia and is not regaining share, but claims that the takeover was never a ‘short-term journey’.

Wilson was replying to a question – asked during an investor Q&A following the company’s half year results presentation lat Thursday – about how Foster’s Group was performing after SAB’s takeover last December.

SAB Miller turned over $17.476bn in the six months to September 2012 (+11% on sales of $15.688bn in H1 2011), while profit after tax totaled $1.59bn (+15%).

“We’ve certainly seen some volume declines ​[SAB’s lager volumes fell 8% in the period, 13% on a pro forma​ basis, slightly worse than market] in Australia, and we are obviously not regaining our market share,”​ Wilson said.

Simply stabilizing premium lights…

But he added that it was early days, some nine months after the takeover. “The business is beginning to perform in terms of the delivery of the synergies we’d anticipated, and there’s a lot of work going on in the portfolio that will ultimately bear fruit in the future,”​ Wilson said.

“So this was never going to be a short-term journey. It was going to take a bit of time to get in there and take over a business that had been undermanaged for a number of years, and actually start getting it back on the right track.”

Moving on to the US, SAB executive chairman Graham Mackay was asked if the industry could “turn around”​ the premium light beer segment, and its big brands, and how MillerCoors (SAB’s JV with Molson Coors Brewing Company) could play its part?

Mackay admitted that he didn’t think the ‘premium lights’ showed any sign of reverting to their dominance in terms of category growth.

“I think the industry would be doing pretty well if it were able to stabilize premium lights and perhaps grow them slightly as the economy improves,”​ he said.

“There’s no doubt that, for the foreseeable future, most of the action in terms of growth is at the higher levels in crafts in particular, and perhaps some imports,”​ Mackay added.

The MillerCoors ‘operating problem’

Nonetheless, MillerCoors was performing well in the US, Mackay said, with Coors Light the best performing premium light brand in the country.

Although sales to US retailers and wholesalers fell 2% and 1% respectively, SAB said in its results announcement, declining premium light and economy volumes were partly offset by double-digit growth in its Tenth and Blake craft and imports division.

 “In fact, in the premium price segment MillerCoors is probably taking share right now,” ​Mackay said.

“The MillerCoors business operating problem, if you like, is not that, it’s the fact that we under-index at the top of the market in crafts and imports,”​ he added.

“We are making strenuous efforts to change the portfolio and to reorient it into the craft and import segment, and we’re making progress in that. But there’s still quite a long way to go.”

Conversely, SAB/MillerCoors over-indexed in the below premium segment, which was in “reasonably strong”​ decline, Mackay said, where the firm had taken pricing but was suffering volume declines.

(*Register here for free access to the first ever online event​  devoted to Operational Efficiency in food and beverage processing on November 29, organized by our sister site and William Reed Business Media.)

Related topics Manufacturers Beer & cider SABMiller

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