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Research and Markets: Examine the Impact That Pacific Beverages Will Have in the Australian Alcoholic Drinks Market

Posted on: Tuesday, 19 June 2007, 00:00 CDT

Research and Markets (http://www.researchandmarkets.com/reports/c59934) has announced the addition of Australia Food & Drink Report Q4 2006 to their offering.

With the formation of Pacific Beverages - the alcoholic drinks joint venture of local soft drinks major Coca-Cola Amatil (CCA) and Anglo-South African brewing major SABMiller - Australia's dynamic alcoholic drinks industry has got itself a new player. In its newly-published Q406 Australia Food & Drink Report, the report examines the impact that Pacific Beverages will have on the established competitive landscape and explores the risks that CCA has taken in its continued attempts to diversify.

At first glance, CCAs motivations seem questionable. We are forecasting growth of 10.9% to 2010 in the company's existing soft drinks industry, while growth in the beer industry will reach just 8% to 2010, according to our forecasts. Yes, the company needs to continue to diversify away from its carbonated beverage stable during these times of growing consumer interest in healthier food and drink products, but is beer really the product to help it drop an unhealthy image and appeal to healthier consumers? Well, yes actually. Having found a highly brand-conscious partner with as strong a premium portfolio as SABMiller, CCA can avoid many of the negative and unhealthy image problems associated with alcoholic drinks, such as beer. Premium beer is of course still beer, but sales figures and successful product launches have taught us that consumer perception is different and that a premium beer served in a stylish bottle will be regarded very differently to canned lager or traditional looking beers by aspirational and health aware Australian consumers.

The foundation of Pacific Beverages is unique in that the company already has a strong portfolio and, in SABMiller, a shareholder capable of focusing its investment almost solely on further brand-building and marketing opportunities. Similarly, in CCA, it has a shareholder with the infrastructure and network to distribute throughout Australia. However, in spite of this it is entering a market dominated by a multinational-backed brewer - Lion Nathan (partners with Asia Pacific Breweries) and one in which competition has already spelled the end for a number of small players in recent years.

We believe that the short-term task for Pacific Beverages will be to build up a substantial enough portion of market share to offset the challenges of rising energy costs and fierce price competition without having to draw too heavily on additional resources from its two shareholders, each of whom have their own empire to watch over. Realistically the joint venture can only really expect middle to high single digit market share in the short-term, due to competition and the fact that its portfolio is unique to the premium end of the market, which although high-growth, appeals to a smaller number of consumers.

For CCA this could in fact be desirable. The worst case scenario for the company would be for its alcohol venture to be such a success that it squeezed the margins of its new competitors to such an extent that they were forced to diversify into other beverage categories to survive. CCA would then stand alone in preventing a retaliatory assault on its own market share.

Topics Covered Executive Summary Chapter 1 - Business Environment Chapter 2 - SWOT Analysis Chapter 3 - Retail Chapter 4 - Food & Drink Chapter 5 - Tobacco Chapter 6 - Competitive Landscape Chapter 7 - Forecast Modelling Companies Mentioned - National Foods - Aldi - Coles Myer - Woolworths - Metcash - Foster's Group - Coca-Cola Amatil - Lion Nathan

For more information visit http://www.researchandmarkets.com/reports/c59934.

Source: Business Wire

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