Coopers positive despite tough year

Tim Coopers

The lingering impacts of the COVID pandemic continue to impact Coopers, but the company says it is ‘cautiously optimistic’ for the year ahead as it reported both sales and profit declines for the year.

Australia’s third largest brewer brewery recorded total beer sales, excluding non-alcoholic beers, of 79.4 million litres for the 12 months to June 30, representing a 3.5 per cent fall on the 2021 financial year volume of 82.3 million litres.

Before-tax profit was also down almost twenty-five per cent, falling from $36.5 million to $27.3 million.

Managing Director Dr Tim Cooper told Brews News that keg volumes were down 13.5 per cent over the year, primarily due to the direct effects of COVID in the first half of the reporting period, but people working from home continued to have an impact on keg sales.

“Publican’s are still telling us they have a significant loss of trade as a result of people working from home,” he said.

“It’s had a tremendous impact on hospitality and, in turn, on the brewing industry.”

Dr Coopers said while volumes were down, profit was down further due to increased price pressures on inputs including higher costs for freight and logistics, along with higher manufacturing including barley and aluminium.

“The demand for beer is elastic and as the price goes up, people aren’t buying as much beer,” he said.

“And so I think quite often people will say, ‘oh, well beer is recession proof’, but from my experience, I don’t think it is. When we had the recession in the early ’90s beer volumes went down.”

Shift to cans important

While Dr Cooper said Coopers’ tap volumes were down by more than the industry average, package volumes were down less, with cans being a major factor.

“[In keg beer] we went down more than the industry average, but our pack volume was better than the industry average, but still went down,” he said.

He said Coopers’ canned volume increased as a percentage of sales from around 30 per cent last year to almost 34 per cent of total volume and, in hindsight, Coopers was slow to make the move to that format.

“The fact that they grew so quickly once we put Pale Ale in cans and called it Pale and not Dr Tim’s, that had a very beneficial effect.”

“It must have held us back, and I would say our salespeople would have been asking for us to get rid of Dr Tim’s for at least two years before we eventually did it.

“But we were still concerned that the flavour consistency was not as good as we would like it to be but I think, over time, we have become more convinced that it’s quite satisfactory in terms of maintaining flavour consistency in cans relative to bottles.

“So it’s worked out well and it shows in sales.”

Malt down as Lion closes

Malt sales from Coopers’ malting declined impacted by Lion’s closure of its West End Brewery with logistical challenges preventing that volume being picked up in export.

“We actually had spare capacity as a result of the West End Brewery shutting down. We’d been supplying West End in the prior financial years,” he said.

“Doug Stewart, our maltings manager, was expecting to easily sell that tonnage into the export market. But we were having trouble, particularly in the early part of the financial year getting shipping containers, so we weren’t able to take the advantage of having some spare capacity for doing export.”

Is there a volume ceiling for Coopers?

While Coopers has managed to largely retain volumes around the 80-million litres mark in a declining overall market, growth beyond that has proved challenging, prompting Coopers’ to ponder its growth potential.

“Our volumes were 79.4 million litres for the most recent year, and the year before it was 82.3 [million] and my fellow directors ask me the same question, ‘have we reached the limit of what we can do?’”

“In the FY 17 year we got up to 83 million litres and we’ve sort of been more or less static, with some ups and downs.”

He said the declining beer market overall and the continued growth of craft brewery numbers presented headwinds for Coopers’ growth, though internally the company believed a 7 per cent market share was achievable.

“I think it’s a competitive market and the total market’s not increasing, but we need to keep on being innovative. When we see the opportunity, we bring out new products like the Pacific Pale Ale and the XPA,” he said

“But we also need to keep trying to push interstate, particularly in the Eastern states,” he said

“We’re doing alright in Western Australia, but in the Eastern states we’ve got to try and keep getting our volumes to increase.”

Dr Cooper said Queensland is now a bigger market for Coopers than Victoria.

“Victoria has got a fair bit bigger population but we did 13.6 million litres in Queensland last year, and I think Victoria was only 13.1 million litres.”

Share buyback

In addition to increasing its dividend from $13.50 per share to $14 per show, Coopers announced a share buyback accessible to more than 180 shareholders at a price of $405 per share. With 1.07 million shares on issue, this values the company at approximately $433 million.

In 2005 the then Lion Nathan attempted a takeover of Coopers, initially for $ 352 million, before upping it to $ 420 million. Since Coopers defeated that bid, it has gradually reduced the shares on issue from 1.35 million.

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Coopers posts solid beer sales for 2022 financial year

Coopers Brewery is cautiously optimistic for the year ahead on the back of a commendable sales performance in the 2022 financial year.

Australia’s largest independent family-owned brewery recorded total beer sales, excluding non-alcoholic beers, of 79.4 million litres for the 12 months to June 30, 2022.

This represented a 3.5% fall on the 2021 financial year volume of 82.3 million litres.

Coopers Managing Director Dr Tim Cooper said the result was in line with the domestic beer industry experience over the same period.

“Overall it’s a commendable result for Coopers given the supply and demand pressures facing the entire industry,” Dr Cooper said.

“Our enthusiasm and drive remain as resolute as ever.

“The brewery is in a strong financial position and we maintain a positive long-term outlook which gives us confidence to invest significantly in our operations. We are soon to break soil on one of the most exciting capital expenditure projects in our company’s 160-year history.”

Coopers’ home at Regency Park in South Australia will be transformed over the coming year as a new visitor centre, microbrewery and whisky distillery begins to take shape adjacent to the existing brewery. This $50 million investment will position Coopers for the future with tourists among those front-of-mind in the design. A separate $15 million expansion of its onsite warehouse is already underway.

Dr Cooper said the hospitality sector continued to show the strains of restrictions imposed in response to the pandemic during the 2022 financial year, keeping domestic sales subdued while freight and logistics issues impacted international trade.

The rising popularity of cans has this format now representing 33.5% of Coopers packaged beer sales while keg sales declined further from pre-Covid levels during the 2022 financial year, reflective of tough lingering conditions facing pubs and licensed venues.

Across Australia, sales volume results in the 2022 financial year varied:

  • Western Australia – up 2.0%
  • New South Wales and ACT – down 4.9%
  • Queensland – down 0.8%
  • Victoria and Tasmania – down 7.4%
  • South Australia – down 4.6%
  • Northern Territory – steady

Western Australia bucked the trend, with its sales growth driven by the mid-strength craft beer market, in which Coopers Mild Ale was particularly successful. Greater on-premise presence for Coopers also pushed WA bulk beer sales higher.

“Western Australia was the standout market for Coopers in terms of sales growth, and over the past three years our volumes in the west have risen 19%,” Dr Cooper said.

“While the overall market remains tight, we are seeing some positive signs emerging.

“Encouragingly, keg sales have recovered somewhat since June 30 and currently tracking ahead of last year’s results. Production levels at the brewery are also ramping up as we increase our contract manufacturing of more international brands.”

Under a partnership with Molson Coors Beverage Company, Coopers is now manufacturing the Miller Genuine Draft, Miller Chill and Coors brands. Australian manufacturing and distribution agreements have also been extended with Sapporo and Carlsberg during the past financial year.

Profit-before-tax for the 2022 financial year was $27.3 million, compared with $36.5 million the previous year. The lower profitability is attributable to a decline in keg sales volume of 13.5%, a reduction in malt sales tonnage of 9.3%, and higher costs of freight and logistics, along with higher manufacturing costs, including barley, aluminium, and tin-plate.

Fully franked dividends of $14 per share were paid in the financial year, up from $13.50 per share paid in the prior financial year.

A share buyback has been announced, accessible to all of Coopers more than 180 shareholders at a price of $405 per share.

Coopers’ charitable foundation distributed a record annual amount of $760,000 to 25 charitable projects during the year.

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