Coopers growing despite draught headwinds
Coopers Brewery grew overall beer volumes again last year, despite a decline in draught sales that managing director Dr Tim Cooper has attributed to increased competition from small independents and Asahi Premium Beverages.
Coopers’ sales rose 2.9 per cent to a record 83.8 million litres, which Tim Cooper said brings its total share close to five per cent of the national beer market.
The rate of growth slowed slightly from the 3.3 per cent the brewer achieved the previous year.
However, Cooper said the company was still pleased with the result, considering that industry figures indicate the beer market contracted by 1.9 per cent over the same period.
He told Brews News that Coopers’ draught sales declined 1.2 per cent over the year, versus the 0.8 per cent growth achieved in FY16.
“We certainly know that some of the big chains are allowing more taps to be designated as guest taps, or taps that can be allocated to the craft brewers,” he said.
“The effect is that that’s impacting on our keg sales.”
He said the new Session Ale is Coopers’ attempt at a beer that will allow it to compete better against these independent products.
“It’s a new offering based on looking at a growing segment of the market where summer and session ales seem to be growing quite strongly,” he said.
“Clearly a number of brands in that market segment are craft beers, so it is an attempt to give ourselves more breadth in our portfolio to appeal to that segment.”
Asahi ‘buying taps’
Cooper said he did not believe Coopers had lost any market share to independents based on price, with some small brewers seeking to aggressively build volume by selling kegs as cheaply as $120.
“That’s getting down to excise, GST and production costs. They’re not going to be able to reinvest back in their business on that basis,” he said.
However, he said Coopers had certainly experienced tougher price competition from one of the second tier multinational brewers.
“Certainly we see Asahi’s been very active in the market in buying taps, in terms of providing rebates to the publicans to put their beers on tap,” he said.
“When we talk about the craft brewers [taking draught share] you could almost say the craft brewers plus Asahi.”
“We’re yet to see the same sort of traction from Coca-Cola Amatil.”
Tough times in SA
Cooper acknowledged that the company has had a tough time in its home market of SA, where the competition from independents has been felt particularly strongly.
“We’ve seen here in South Australia that where we enjoyed pretty strong tap point positioning over a long period of time, some of those have been lost to the craft brewers,” he said.
“Also, the demographics of South Australia have been against us. Whereas we’ve seen over say several years a decline in the national beer volume of one to two per cent [per annum], in South Australia the decline has been faster as a result of an ageing population.
“Fortunately we’re up after four months for this financial year in South Australia, so that’s good. It is a little bit of a sorry story, the decline [in SA] versus the good news story of the growth interstate.”
Cooper said the brewer’s SA sales peaked at 26 million litres in 2006 and have since gradually declined to reach 19.2 million litres last year.
He said this had resulted in the recent redundancies in Adelaide, amounting to five per cent of head office and production personnel.
“At the same time we’ve been increasing our numbers interstate, so from an overall numbers perspective we’ve stayed the same,” Cooper said.
Cooper said there appeared to be little impact on beer sales resulting from the March consumer backlash against Coopers’ supposed links to same sex marriage opponents.
“Despite the huge social media uproar that the whole episode caused, it didn’t seem to affect beer sales very much, if at all,” he said.
He said keg sales declined marginally in March and April, but rebounded strongly in May, while sales of packaged beer grew consistently over the entire period.
“In the overall volume, we actually grew in those [next] three months – April, May and June,” he said.
Strength in packaged
Cooper told Brews News that draught sales now represent 15.2 per cent of Coopers’ overall beer volume, with its sales growth during FY17 built on improved packaged beer sales.
New South Wales led this growth with sales up 6.9 per cent. Queensland was up 5.5 per cent, Victoria was up 3.5 per cent and Western Australia rose 1.8 per cent. Sales of packaged beer fell slightly in South Australia.
“NSW is our strongest market, representing 27 per cent of total sales, compared with 22.9 per cent for our home state of South Australia, 18.7 per cent for Victoria and 16.2 per cent for Queensland,” he said in the company statement.
“Turnover for 2016-17 rose to $252.4 million compared with $245.9 million from the previous year.
“Profit before tax of $33.4 million was down 3.5 per cent from $34.6 million in 2015-16, a result impacted by the final write-down of the goodwill and brand names of Mr Beer (USA), overhead costs associated with the construction of the new maltings plant and redundancy costs.”