Coca-Cola buys into spirit market

The Australian arm of Coca-Cola Amatil has announced that it will be expanding its alcohol business - but not with a purchase from Fosters.

The leading soft drink company has decided to invest $70 million in two other businesses over the next two years, rather than buying Fosters' spirit and spirit ready-to-drink (RTD) business.

The move comes after an inspection of the books, and now presents SAB Miller with the opportunity to make to AU$34 million from the purchase - six months after buying Fosters for $11.5 billion.

"CCL has developed an excellent manufacturing, sales and distribution platform for alcoholic beverages and a key consideration in the due-diligence process has been weighing up the relative brand health of the existing Foster's brands versus developing (CCL's business)," chief executive Terry Davis said today (March 5).

Coca-Cola Amatil has the right to acquire each of three Fosters' businesses - Australian spirit and spirit ready-to-drink, Australian non-alcoholic beverages and the Fiji Breweries and distillery - as part of the agreement to sell its interest in Pacific Beverages to SABMiller.

The company released its full-year results on February 22, posting an annual net profit of $591.8 million for the 2011 calendar year - up 19 per cent on the previous 12 months.

Trading revenue lifted 6.9 per cent to $4.8 billion, and the company declared a fully-franked dividend increase of 8.9 per cent, rising to 30.5 cents per share.

Mr David told analysts at the time that despite 2011 being "the most challenging year the business has faced in over a decade," he was look ahead to the next 12 months.

"While the weak consumer spending environment in Australia and New Zealand remains a concern, and the persistent poor weather in NSW and Queensland has dampened summer trading, we have a solid promotional program in the lead-up to the Olympics, with Coca-Cola a key sponsor, and we are cycling the impacts of natural disasters and poor weather in 2011," he
said.

"While in the short term we may not be able to compete in beer in Australia, we are not restricted in other markets and we would expect to be back in the beer business in Australia in early 2014."