Spirited drinkers switching to beer

DRINKERS of mixed spirits, who abandoned them after the Federal Government's new tax last year, appear to be switching some of their consumption to beer.

A report by stockbroker Citi on beverage trends, based on consumption data from ACNielsen, shows beer sales started to turn around in May — a month after the tax in the ready-to-drink category was increased by 69 per cent.

Earlier research by Citi had indicated the buyers of the so-called alcopops were also buying straight spirits, and presumably mixing their own drinks.

The upturn in beer consumption in Australia is modest, running at a 0.5 per cent gain in volume by the end of last year — suggesting consumption has stopped shrinking, rather than started growing.

Beer is considered "recession resistant" by economists, and a report by Goldman Sachs JBWere earlier this month said beer sales were still strong here, but figures emerging overseas this week suggest otherwise.

SABMiller, the London-based brewer of Grolsch, Miller Genuine Draft and Peroni Nastro Azzurro, revealed its beer shipments fell unexpectedly in the third quarter as consumer demand fell.

Copenhagen-based Carlsberg, a growth product in the Australian premium beer market, announced 274 job cuts to save on costs due to a future "where we face more uncertainties and risks", the company said in a statement.

Benj Steinman, editor of US trade publication Beer Marketer's Insights, said the beer market had averaged growth of about 1 per cent a year over the past 10 years. In the past few years it had exceeded that, but in 2008 sales were up only half a percentage point, he said.

SABMiller also said that, for it, the peak Christmas selling season in Europe never arrived. The cool summer in parts of Australia, like Melbourne, may also test Australian brewers' sales.

The quarterly report on beverage trends by Citi analysts Andy Bowley and Craig Woolford argues the upturn in beer drinking seems to have benefited Foster's Group most, clawing back 1.8 percentage points of market share from under 49 per cent to more than 50 per cent since May. But Foster's is also a seller of mixed-drink products and its volumes are down more than 20 per cent there.

Citi's work was also slightly hampered by limited availability of Lion Nathan and Coca-Cola Amatil data, due to the former being in the middle of trying to take over the latter.

"Foster's (beer market) share gains have coincided with the change in management adding support to new CEO Ian Johnston's focus on marketing and innovation," said the Citi report.

Low-carbohydrate brand beers, such as Pure Blonde, are still selling well — the Nielsen figures show sales volumes up between 20 per cent and 30 per cent in the past three months — as are the premium and imported beers such as Corona, also in the same percentage growth categories.

For Foster's, which is still a month away from revealing the results of its internal wine review, a recovery in beer might offset mixed trends in wine where the value of exports fell steeply in 2008, although volumes of bulk exports are rising.

That data might, however, be missing a growing trend among winemakers to save money, and add to their carbon-friendly credentials, by shipping some premium wines in bulk and bottling them overseas. Wine exporters are also generally benefiting from the twin effects of a weaker Australian dollar and sharply lower shipping costs.

Foster's shares yesterday closed at $5.24, up 3¢. Lion was 7¢ better at $8 and Coca-Cola Amatil rose 10¢ to $9.60.