Corona isn’t just from where you would rather be, Corona itself would rather be somewhere else.
Two releases have come through from CUB about the news today that they have lost the Corona franchise in Australia. It’s been speculated for some time that this has been on the cards and, with the market for Corona estimated to be larger than the entire craft market, has got to hurt.
It is early days yet for SABMiller to have had much effect over the direction for CUB, and we are yet to see which CUB brands will be culled to make way for the likes of Peroni but it will surely be an interesting year for the company.
Distribution of Corona in Australia
Grupo Modelo has advised that it has elected to terminate the agreement with Foster’s in relation to the distribution of Corona Extra, Pacifico Clara and Negra Modelo in Australia. This decision is not connected with CUB’s performance under the agreement, which has exceeded all contractual requirements.
While this will have a short-term impact, it is consistent with SABMiller’s long-term strategy of investing in and growing its own proprietary brands.
CUB, through SABMiller, now has access to its own global brands – Peroni Nastro Azzurro, Peroni Leggera, Miller Genuine Draft, Grolsch Premium Lager and Pilsner Urquell . CUB will invest to grow these throughout Australia to capitalise on the opportunity as a result of exiting the Modelo agreement.
Peroni is one of the fastest growing beers in Australia; Miller is currently receiving strong sales results from its recent test marketing campaign in Western Australia. In addition, Carlton Dry continues to be the fastest growing top 10 beer in Australia.
In addition, CUB will continue to invest in its own portfolio of leading domestic brands, including Carlton Draught, Victoria Bitter, Cascade, Crown Lager and the fastest selling craft beer, Fat Yak.
The termination of the agreement is effective immediately.
Termination of Corona Extra licence in Australia
SABMiller’s Australian subsidiary, Foster’s Group Ltd (“Foster’s”), has been informed by Grupo Modelo S.A.B de C.V. that it intends to exercise a change of control provision terminating Foster’s licence to import and distribute Corona Extra in Australia with immediate effect.
The move follows SABMiller’s acquisition of Foster’s in December 2011, through which Foster’s gained access to SABMiller’s premium brand portfolio in Australia, including Peroni Nastro Azzurro, Peroni Legerra, Miller Genuine Draft, Grolsch Premium Lager, Bluetongue and Pilsner Urquell.
Sales volumes of Corona Extra in the calendar year 2011 were approximately 600,000 hectolitres in a total Australian market of some 18 million hectolitres.
SABMiller’s expected financial returns from the acquisition of Foster’s will remain broadly unchanged following this termination.