Asia's beverage sector fizzes despite downturn(3)
There is talk that Foster's may separate its struggling wine business from the beer unit, valued at more than $10 billion, in a move that could signal a possible split when market conditions improve and wine earnings recover.
"It is more likely a when, not an if," said Kristan Walker, retail and beverages analyst at Deutsche Bank. "You are probably looking at two scenarios, either a trade sale or a demerger."
If there was a split, Foster's beer operations would likely appeal to brewers such as Molson and Asahi, drawn by a market with healthy margins due to its domination by two big players.
BRANDING
As Asia's market gains momentum, local brand names may have an edge over imported brands because they can sell at lower price points and have more efficient distribution networks.
In India, rationalization of import duties has brought down prices of imported alcoholic drinks brands, while a move in 2005 to allow beer and wine to be sold at supermarkets has encouraged demand for liquor and global brands.
India is now the second-biggest market for Ciroc, Diageo's "superluxury" vodka. Its Black Label whiskey is an "iconic brand" in India, said Diageo's Asia-Pacific President John Pollaers. United Spirits Managing Director Vijay Rekhi says Indian consumers have only recently embraced "labels" and per capita consumption has risen. It stood at 2.3 liters in 2008 versus 0.3 liters in 2003 according to the World Health Organization.
"Brand consciousness amongst consumers has finally permeated into the spirits category as well," Rekhi said.
It's being felt elsewhere in Asia, a region where people are so conscious about brands that they pay huge amounts for designer bags, clothes and even alcohol bearing high-end labels.
Singapore's national beer Tiger is losing popularity among young drinkers who opt for imported beer with brand cachet.
"Younger Singaporeans don't drink that much Tiger Beer and go for imported beers like Heineken, Erdinger and Kilkenny," said Tibre's Chia.
(Additional reporting by Simone Giuliani in Melbourne, Taiga Uranake in Tokyo, Donny Kwok in Hong Kong, Janaki Krishnan in Mumbai and Nopporn Wong-Anan in Singapore; Graphic by Claire Morel)
