Coca-Cola to exit beer in Australia, sell Feral

Coca-Cola Europacific Partners has announced that it will be withdrawing from the Australian beer market in a move that will see Feral Brewing sold.

Brews News understands there is not currently a buyer for Feral, but CCEP is currently looking for expressions of interest.

Coca-Cola Europacific Partners, formed last year when Coca-Cola Amatil was acquired by Coca-Cola European Partners, currently owns Feral Brewing, as well as a joint venture with Casella Wines, the Australian Brewing Company. Coca-Cola also has a distribution agreement with North American brewer Molson Coors and distributes Magners cider.

Staff have been advised that following a strategic review of its beer and cider portfolio, the company will be withdrawing from its production, sale and distribution arrangements in Australia.

The company has advised staff that following a strategic review it became clear that achieving scale in beer and cider would require significant investment that would come at the expense of its core spirits, RTD and non-alcohol businesses, where it saw greater capacity for growth.

Feral staff have been advised that despite achieving double-digit growth over the past four years since it was acquired by CCA, a sale process will be begun ‘shortly’.

The decision also raises the future of the Australian Beer Company, and the Yenda Brewery, with a review of CCEP’s interest also being conducted.

Coca-Cola Europacific Partners has been approached for comment.

Feral Brewing

Pioneering Western Australian brewery Feral Brewing Co. was launched in 2002 by Brendan Varis and Alistair Carragher.

It was acquired by CCA in 2017 with the company saying that the acquisition would complement the multinational beverage company’s existing portfolio of brands.

This portfolio included Yenda beer, which was brewed at Australian Beer Co., a joint venture between Coca-Cola Amatil and winemakers Casella Family Brands.

At the time it was suggested that CCA was building its beer market share, however since the acquisition of Feral there has been little movement by the company to acquire further breweries or grow its portfolio of beer brands brewed out of Australian Beer Co.

Feral founder, Brendan Varis, who left the business to little fanfare in 2020, said then that the acquisition by CCA would allow Feral to accelerate its future growth plans and that a full sale would deliver “the best outcome for all”.

While Feral has maintained its strong brand position in Western Australia and was lauded by CCA as a standout success in its markets during the COVID period and for its double-digit growth, CCA didn’t manage to generate much growth on the east coast.

Feral expanded in 2012 to a production brewery in Perth which it shared with Nail Brewing, which it outgrew before moving to a larger facility nearby in 2016.

It was recently announced that Feral would be leaving its Swan Valley venue after two decades at the site.

Australian Beer Co.

Australian Beer Co was formed in 2012 as a partnership between Casella Wines and CCA, in the leadup to the end of the latter’s agreement not to sell or manufacture beer in Australia.

CCA entered into that agreement when it agreed to sell its 50 per cent interest in their Pacific Beverages joint venture to SABMiller when SABMiller acquired Fosters in 2011.

To facilitate its return to the Australian market, CCA provided a $46 million load to the Casella-owned brewery in Yenda, NSW. Earlier that year Casella had launched its ambitious brewery, capable at the time of producing 500,000 hectolitres, equivalent to Coopers size at the time.

Casella Family Brands, creators of the successful Yellow Tail wine brand in the US, opened the brewery hoping to capitalise on its wine success. John Casella said at the opening in 2012 that the brewery has cost double what had originally been budgeted, with rumours the project cost upwards of $65 million.

A number of attempts to launch brands failed to grab traction in the local market, and even the trial of a Yellow Tail beer in the US failed to deliver results.

Despite ambitions to make the Australian Brewing Company’s Yenda brand a top 5 craft beer, the brand has also underperformed for a brewery of its size.

The brewery sought to fill capacity taking on contract brewing for number of brands, most recently, Stone & Wood commenced brewing its Green Coast 3.5% abv Lager at the Yenda-based brewery.

Following the publication of the above article, Coca Cola released this statement, which remains unedited by Brews News.

Coca-Cola Europacific Partners Australia (CCEP) has today announced that following a strategic review of its beer and cider portfolio the company will be exiting from its production, sale and distribution of beer and apple cider products in Australia.

Vice President & General Manager, Australia, Pacific & Indonesia, Peter West, said the decision to exit CCEP Australia’s arrangements relating to beer and apple cider would better position the organisation to execute growth plans for its Spirits, Alcohol Ready-To-Drink (RTD) and Non-Alcohol Ready-To-Drink (NARTD) business.

“We are very proud of the journey and performance we have had in our beer and cider portfolio after close to two decades. The next growth phase for the portfolio to become a stronger key partner with our customers would require significant over-investment to accelerate scale.

“As a bottler of iconic brands such as Coca-Cola and Jim Beam, this would come at the expense of focusing our efforts, teams and innovation on our core Spirits, RTD and NARTD portfolios, where we have a much greater ability to drive category growth,” Mr. West said.

“A move away from beer and apple cider will allow for greater focus for our teams to execute our exciting growth plans in Spirits, RTD and NARTD and enable the future partners of these beer and apple cider brands to continue to accelerate their performance,” said Mr. West.

As a result of the decision, CCEP’s current arrangement in Australia with C&C Group will come to an end during the first half of 2022 and its agreement with Molson Coors will not be renewed in the coming months. CCEP will be working closely with customers and brand partners to ensure a smooth transition that allows for the continued growth of brands that the CCEP team has worked so hard to build.

Following this decision, CCEP is also pleased to launch a sale process for its high-growth craft brewing business, Feral Brewing Company. CCEP has appointed sector experts Kidder Williams Ltd to advise on the sale.

“On the back of the double-digit growth our Feral brand has achieved over the last four years and the strong business and brand loyalty the Feral team in WA has built, we are excited about what the future holds for Feral Brewing Company. It’s time for this craft brand, a WA jewel, to stretch its potential under new ownership,” said Mr. West.

Rekorderlig and Australian Bitters will continue to be managed in CCEP’s alcohol portfolio alongside its Spirits and RTD brands.

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