ACCC takes note and craft brands remain in wake of CUB sale

Analysis and news summary

When news broke late on Friday that Japanese brewer Asahi had purchased CUB, it landed like a bombshell in the beer industry.

Predictably there was a rush to post the news, but outside of the information contained in the announcement, little is known about the transaction with much speculation as to the future plans of an Asahi-owned CUB, its business and brands.

Even today, the simple answer is no one knows much. This was a deal done between two overseas corporate head offices with details only trickling down to its Australian operations about what it means over the weekend. As with the SABMiller purchase by ABI, the new owners’ intentions and the ramifications of the deal will become clearer over the next six months. The deal will close in the first quarter next year.

With few details available even Australia’s major business papers had to turn to Coopers head Dr Tim Cooper for his observations to flesh out their coverage and fill column inches to add to the five paragraph statement from CUB chief Peter Filipovic (below) released over the weekend.

There is much to be worked out between now and next March in terms of what it means for Australia’s largest brewer.

First comment from CUB chief, Peter Filipovic.

“Carlton & United Breweries is very excited to be joining Asahi,” Mr Filipovic said.

“We are a great Australian business, with iconic brands, world-class breweries and great people.

“These have made us the market leader in Australia and we look forward to growing the business and the beer category with Asahi.

“Not only will we continue to brew our famous beers such as VB and Carlton Draught in Australia, but we’ll join a company that has fantastic beers such as Asahi and Peroni.

“We look forward to continuing to be a vital part of the Australian community that we’ve served for more 180 years as we grow the business with Asahi.”

What we do know:

Contrary to weekend speculation about ZX Ventures’ ownership, the deal does include recently-acquired craft breweries 4 Pines and Pirate Life. It also includes online retailer BoozeBud. The future of RateBeer was initially in question, but it has now been confirmed that RateBeer will not be included in the portfolio being sold to Asahi.

CUB retains the rights to ‘commercialise’ ABI’s international portfolio of brands in Australia. This is understood to mean that it retains the right to import and brew-under-licence, market and distribute brands such as Corona, Stella Artois and Budweiser, as well as craft brands such as Goose Island.

What we don’t know

ACCC attitude

With ABI’s brands now joining Asahi’s global brands – including Asahi, Peroni, Pilsner Urquell and Grolsch – the local market sees a far greater concentration of these international beers than existed when ABI divested a number of these brands to Asahi to ease regulatory concerns in Europe.

The ACCC says it has been “notified of this proposed transaction by the parties involved. We will begin a public review once we receive a submission.”

In 2005 the ACCC decided not to oppose Lion’s proposed purchase of Coopers saying that it was “unlikely to result in a substantial lessening of competition”.

“The evidence received…suggested that most competitive tension in the beer market is generated by competition between Lion Nathan and CUB”, Mr Samuel said at the time.

Whether it maintains the same attitude in relation to this sale remains to be seen, though as one employee from a competing brewery remarked today, referring to the new range and its impact on tap agreements: “It’s a pretty bloody compelling offering”.

Lion/Kirin’s response

As one craft brewer said this morning, “I guess that will kill the rumours about Asahi buying another craft brewery – now there’s no more buyers for craft”. However, facing such a compelling beer offering will this change Lion’s ‘cultivate our own’ approach to craft?

Lion’s maintream range has been under pressure from the Great Northern juggernaut in the face of declining sales of its traditional mainstream range. While Lion locally has a broad portfolio of domestic mainstream and craft brands, its international ranks – Kirin, Heineken, Guinness and Birra Moretti – are thin by comparison with the supercharged Asahi/CUB range. If allowed by the ACCC, the new Asahi/CUB line-up will put added pressure on its Japanese rival.

Jobs/brewery changes

The future of Asahi’s existing Laverton brewery is uncertain, with that brewery now adding to CUB’s existing Abbotsford and Yatala plants, together with the Cascade, Pirate Life and 4 Pines breweries. Laverton duplicates capabilities at CUB’s other plants, which have considerable excess capacity in the face of declining beer consumption.

In 2014 the $125 million Bluetongue Brewery in Warnevale, NSW, was closed just four years after it opened following CUB’s purchas by former owner SABMiller. CUB said at the time that the significant Warnervale brewery represented just 5 per cent of its total capacity.


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