Wealthy, stable and closely linked to Asia: Why Australia was so attractive in Foster’s takeover

SABMiller, the world’s second-biggest brewer, says the $12.3 billion acquisition of Foster’s delivers it a platform into the wealthy Australian market and its links to the emerging economies of China and India.

Speaking overnight, SABMiller CEO Graham Mackay said Australia was a developed and wealthy market, but different in its underlying characteristics from the markets of Western Europe and America.

“The demographics are much better certainly than any of the European markets because there is immigration from Asia and from other parts of the world,” Mackay told the BBC.

“The consumers are not overextended as they are around here, and the economy as a whole is linked much more closely to the new emerging economies of China and India and the east.”

Mackay added that while he expected consolidation to continue in the beer industry, SABMiller tried to keep in mind that it was running a “vast number of local businesses. We connect with consumers on a local level, using overwhelmingly local brands.”

“You can’t market globally to the global beer consumer – there’s no such thing,” he said.

The takeover by SABMiller, the company behind Grolsch and Miller Lite, is the largest in the world of brewing since InBev bought Anheuser-Busch three years ago for $US52 billion.

Foster’s, the 157-year-old brewer behind Victoria Bitter and Carlton Draught, describes the $5.53-per-share offer as “compelling” and says it offers certainty in an uncertain global economic environment.

Questioned whether the head office would remain in Australia, Foster’s chief John Pollaers this morning promised “heavy investment” here, although conceded some job losses “at the margins.”

Together with Lion Nathan, Foster’s dominates Australia’s multi-billion dollar beer sector although its flagship Victoria Bitter beer has lost market share over the past few years. Foster’s also has the licence to brew or sell Stella, Corona and Asahi.

Independent brewers have managed to eke out market share over the past decade or so, capitalising on an increased appetite for boutique beers.

The takeover leaves South Australia’s Coopers the largest Australian-owner brewer – a title the 149-year-old company says it wears as a badge of honour.  

“Coopers currently has about 4% of the Australian beer market, but we see the fact that we remain Australian-owned will provide us with strong marketing opportunities in the future,” its managing director Tim Cooper says.

Coopers will continue to “vigorously maintain its independence”, Cooper says, drawing attention to its decision to fight off a takeover bid by Lion Nathan in 2005.

Little World, maker of Little Creatures in Western Australia, was not available for comment this morning. Craft brewer Mountain Goat, which is just down the road from the Foster’s plant in Abbotsford, declined to comment this morning. It earlier said it was unsure whether a foreign takeover would prompt Australians to shift to locally owned brands but noted it was sad another well-known local brand could go overseas.

SABMiller, an Anglo-South African brewer, had originally offered $4.90 per share for Foster’s; a bid rejected by the Foster’s board as too low.

Chances for a foreign takeover of Foster’s were heightened when the company split its beer business from its wine business, listing Treasury Wine Estates on the sharemarket in mid-May. While the wine business has been hurt by the grape glut and the high Aussie dollar cutting exports, the beer business was one of the world’s most profitable, despite a decline in market share for VB in recent years.