For years now the world has heard the mantra: “If you think Australian, you drink Australian.” And if you drink Australian, it follows that your tipple of choice will be Foster’s, the lager that is up there with barbies and boardies as a symbol of Aussie life.
But the Sun is setting on Australia’s home brew as a foreign takeover looms.The country’s largest brewer, with seven of the top ten beer brands under its roof and a 50 per cent share in the beer market, is on the end of an A$11.2 billion (£7 billion) bid by SABMiller, the South African brewer.
If SAB, the world’s second-biggest brewer, is successful, Australia’s two largest brewers will have been taken over by foreigners within two years. Last year Kirin, of Japan, bought Lion Nathan, which in turn had taken over the Swan, Tooheys, XXXX and West End brands from Bond Brewing. Suddenly, it seems, the amber nectar is draining out of Australia — and it is not going down well among Australians.
John Elliott, the entrepreneur who “Fosterised” the world in the 1980s, thundered his disapproval on his website this week. “It’s a very sad day for me,” he wrote. “We had that company in great shape and every brewer in the world was scared of us.
“They sold it all off. It’s inevitable Foster’s will become foreign-owned, which will be a sad day for all Australians.”
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A quick straw poll of drinkers at The Oaks pub in north Sydney provided an equally negative response. Although none of them was drinking Foster’s, all agreed that it should remain in Australian hands.
“We make the best lager in the world,” Rob Shed, a local businessman, said. “It’s not right that Foster’s should go abroad. The Japanese have got Tooheys and XXXX. There won’t be anything left for us at this rate.”
How did it come to this? Most analysts are agreed that it was Foster’s foray into the wine market that led to its undoing. If any further warning were needed against mixing the grape and the grain, Foster’s $7 billion punt on the wine market is it.
The company’s move into wine made sense in the early 2000s as people turned away from beer, but it did not anticipate the later boom in vineyard planting, which has led to a glut of grapes worldwide, and the consequent failure of scores of vineyards as international prices plummeted.
Although Foster’s Treasury Wine Estates business owned some of Australasia’s premium wine brands, including Penfolds, Lindemans and Wynns, critics — including Mr Elliott and Graham Mackay, the chief executive of SAB — have attacked the company for diversifying into wine instead of trying to resuscitate sales of beer, its core market.
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SAB’s bid came ten days after Foster’s had returned to being a pure beer company with the demerger of Treasury Wine Estates.
Despite SAB’s $4.90-per-share cash offer, a takeover by the brewer is not yet a done deal, with some SAB shareholders unconvinced of its merits.
This is partly because the overseas rights to the Foster’s brand have already been sold. In Britain, for instance, Foster’s is brewed by Heineken.
Foster’s shares soared after news of the offer to $5.14, their highest level since August 2008 and far more than SAB’s bid, indicating that the market expects a higher offer from SAB or a rival bidder.
But although the outcome of SAB’s tilt at Foster’s is not a foregone conclusion, it seems certain that a takeover is only a matter of time.