Sales of beer have fallen flat since the federal budget. Photo: Arsineh HouspianSABMiller, the world’s second-biggest brewer that paid $12.3 billion for Foster’s in 2011, has blamed the consumer fallout from Treasurer Joe Hockey’s severe federal budget and heavy discounting on international premium brands for a sharp dive in beer revenue and volumes at its Australian arm.
Releasing its first quarter trading update in London overnight, SABMiller revealed that spiralling sales for its local brewing operation, which takes in popular brands such as VB, Crown, Cascade and Pure Blonde, had deteriorated since the beginning of the year.
The brewer said for the quarter ending June 30, group net producer revenue (which is revenue less excise and similar taxes) had slumped 6 per cent, reflecting a volume decline of 3 per cent.
Earlier this year, SABMiller said volumes for its Australian business slipped 3 per cent for the 12 months to March 2014, doing worse than the broader Australian beer segment, which posted a 2 per cent fall in the same period.
SABMiller chief executive Alan Clark cited a range of issues that had turned drinkers away from Foster’s beers as well as the beverage category in general during the first quarter, including a pull-back in consumer sentiment in the wake of the Abbott government’s maiden budget.
‘‘The soft volume and price performance was driven by continuing category pressure, reflecting increased negative consumer sentiment following the tough federal budget in May, along with continued competitive intensity.’’
A fall in revenue per hectolitre of 1 per cent was driven by heavy price promotions and discounts on popular overseas beer brands.
‘‘The net producer revenue per hectolitre decline was exacerbated by price competition from international premium brands,’’ Mr Clark said.
Foster’s is Australia’s second biggest brewer behind market leader Lion, owned by Japanese conglomerate Kirin, and it is believed both major brewers witnessed a sharp slide in sales in the month following the release of the federal budget.
Some pub and beverage retail insiders have labelled May a “horror month” for the beer sector.
According to data on packaged beer sales collected by Aztec, the beer market experienced 1.4 per cent growth in April, but reversed that to a 0.5 per cent decline in May. Statistics for June show the beer sector bounced back to growth of 1.7 per cent.
SABMiller is in the midst of rejigging its Foster’s beer arm to breathe some growth back into the business and reinvigorate the beer sector as drinkers turn to other beverages such as wine and cider.
It has relaunched its Cascade brand, and introduced new packaging for its Carlton Dry, Crown Lager and Fat Yak labels.
But SABMiller’s volumes are also being pinched by the exodus of key Australian licences and distribution deals following its purchase of Foster’s in 2011, such as the biggest-selling premium beer Corona, which was lost to Lion.
Lion will be releasing its trading performance for the May period later this year.
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