Interesting speculation in The Age that Fosters could lose the Corona and Stella licences.
To me the most important part of this article is this, tucked away right at the very end:
When Foster’s releases its interim results next month it will show that the margins and profits of its beer business have held up, while volume has fallen. The question for the company is, how long can it keep letting market share go before it has to start buying volume?
In beer economics, less production volume means less recovery of production fixed costs. It’s all to do with losing or winning scale economies.
It pretty much sums up the big brewing industry – it’s a unit cost game. I just hope that the quest for volume doesn’t see the business pressuring Matilda Bay to tinker with beers like Dogbolter or Alpha Pale Ale as they have in the past with Redback. Big Helga, which I enjoyed when it was launched, was obviously a style selected to appeal to a wide audience but was still a pretty good, if undemanding, beer. Their competition in the ‘big craft’ market, Lion Nathan’s James Squire, has seemingly toned down the flavour of its major brews – the Amber and Golden Ales – in the search for market share and the beers have suffered greatly – though their popularity has grown…the commodity paradox.
The other interesting element to this speculation is what will happen to XXXX’s intended ‘Corona killer’ Summer Bright Lager if Lion does get the Corona licence in Australia? While the brewery officially denied that SBL was going after Corona when it launched, it looks, quacks and waddles like a duck. Many Lion Nathan affiliated pubs in Brisbane have SBL on the same hig value shelf, right next to Corona in their bar fridge facings and that wouldn’t happen without the brewery’s blessing. They are going head to head. With two beers looking exactly the same and tasting almost identical but one selling as low as $4 a bottle compared to Corona’s $7+, there is only so far exotic goes before the beer “from where you’d rather be” changes to “I’ll holiday at home and save my money.” Or in the case of these beers, drink the local and get more value for my money – which, means drink more for the same amount.
I’ve seen nothing official yet but the reports I’m hearing from pubs is that the Summer Bright Lager is kicking goals, and doing a straw poll myself at pubs that had both – the market share was close to 50-50, although the XXXX was still being heavily promoted. I wonder whether Grupo Modelo would give Lion Nathan the Corona licence while they were competing directly against it, or would Lion kill off what seems to be a successful launch in order to get the “jewel in the crown in the foreign premium beer category.”
No matter what, interesting times ahead in the world of uninteresting beer.