Here is a handy summary of the manoeuvring in the Australian drinks markets in recent months. The current offers on the table are:
– NZ brewer Lion Nathan (46% owned by Japanese brewer Kirin) pitching for Coca Cola Amatil (who bottle and distribute soft drinks and beers and are roughly 30% owned by US firm Coca Cola Company) (discussed earlier here).
– Japanese brewer Asahi bidding for the Aussie Schweppes business (but potentially scuppered by Coca Cola Company) (discussed earlier here).
The Asahi offer throws up the possibility that the firm may either expand its relationship with Aussie brewer Fosters’ or go head to head with them. The firm claims to be biding its time until Fosters’ sorts out whether it wants to stay in the wine business.
Meanwhile, a raft of potential international bidders remain on the horizon for Fosters’ beer business if they can dump the less profitable (and less stable) wine arm, including Moors Colson, SAB Miller, presumably the aggressive Anheuser-Busch Inbev or even Coca Cola Amatil (if they can survive the Lion Nathan bid).
This is well and truly a game of chess in terms of the moves and countermoves we are likely to see over the next 6 months. The wild cards in the pack are (i) the competition regulator in Australia (the ACCC), who might deem any one of these current proposals (or any move by Coca Cola Amatil) unacceptable on the basis that rivalry will be reduced,and (ii) the Foreign Investment Review Board could deem an international acquisition of Australian assets to be outside the national interest. The latter is extremely unlikely given the current level of international involvement.
It still remains very unclear whether if there are clear and valuable synergies here.
Are there genuine economies of scope between the distribution of soft-drinks and beer?
Fosters’ experience seems to indicate that the wine and beer don’t mix well, despite sharing the same retail outlets.
Why would we expect the non-alcoholic and alcoholic product lines to gel any more effectively?
Or, in the end, is this just a simple grab for a currently very profitable, oligopolistic Aussie beer market?
Tags: ACCC, Asahi, Australia, beer, business, Coca Cola, Fosters, International business, Kirin, Lion Nathan, mergers and acquisitions, Molson Coors, SAB Miller, soft drinks, Strategic management
International BS Blog 
January 7, 2009 at 1:02 pm |
Historically the ability for a company to do a good job with both Alcoholic and Non-alcoholic beverages in a portfolio is not good. Lion Nathan has failed many times, Fosters has failed and CCA has not done a very good job – although their current effort with Peroni beer seems to be going OK. Although it seems that they are perfect partners, the categories are historically bought differently at the wholesale side and have different very consumer motivators….
I’d be surprised if one company does a good job in managing both in Australia.
Steve.