Coca-Cola takes on Aussie beer market with new distribution deal

Coca-Cola takes on Aussie beer market with new distribution deal
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Coca-Cola Amatil (CCA) has struck a deal with Molson Coors, the world's seventh largest brewer, to distribute a number of its beers in the Australian market.

The beverage giant is said to have acquired the rights to Carling, Coors Light, Caffrey's and Blue Moon, but may face criticism from investors and analysts for investing in a venture that could take a long time to deliver results.

According to the AFR, one analyst said, "If they got a big brand like Corona that already has a market share of about six percent or seven percent, you can understand it [the strategy] … But they are not going to do that. Instead, this really seems a bit like rats and mice."

In May 2012, CCA won agreements to distribute Modelo's Coronoa Extra, Carlsberg, Molson Coors' Coors Light, Carling and Cobra brands in Fiji, PNG, Somoa, New Zealand and Guam. The agreements are performance-based and form part of the company's efforts to become the Australian distributor for the big brewers, once it's two-year ban from the beer market draws to a close in December.

Last year the company invested $46 million in the Australia Beer Company, which will be used to acquire a state-of-the-art brewery (part of the Casella group) in Griffith, NSW.

It also entered a joint venture with Rekorderlig, becoming the sole distributor and importer of the popular cider brand, effective from 1 January, 2014.

Despite these ventures, brokers are sceptical about how much progress CCA can make in Australia's beer market, doubting its ability to get its hands on big brands like Corona, Heineken and Carlsberg, which are currently tied up in long term contracts with large rivals like Lion and Coopers.

However, CCA MD, Terry Davis, said Australian brewing margins are some of the highest in the world and retailers would welcome a third player in the market, currently dominated by Lion and Foster's.

CCA today posted a lower than expected first-half profit, with net income falling 12 per cent to $216 million from $246 million a year earlier.

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