Not invited to our own beer’s birthday party

Melbourne Herald Sun Thursday February 14, 2013

This year Foster=s will celebrate its 125^th anniversary, and what an historic birthday bash that will be.

Millions have been budgeted for a year-long chain of events. TV commercials have been planned with the first already made, a lavish production recreating that first day.

Set in Melbourne of 1888, proud brothers William and Ralph Foster wheel the first barrel of their newly-created lager into the main street filled with 19^th Century citizens and diggers. In front of a town hall they pour the first glass of their brew and offer it to the mayor who tastes it and declares: ALittle ripper!@ 

Oh, one problem though. We=ll never see it in Australia - this is strictly ersatz Oz made in London for a world market, and Australia has not been invited to the party. 

Somehow in the great Monopoly games of the 80s with the likes of John Elliott and Alan Bond tossing million-dollar assets around the game board, Foster=s became a valuable little earner. In Britain and Europe it is made by Heineken International and is huge across the continent. You=ll find it in the US, Russia, Canada, India. Probably the hardest place to find a Foster=s is Australia.

SABMiller now own CUB here, after an $11 billion buy in 2011. They found a declining beer market, pounded by wines on the one side and trendy mixers and boutique ales on the other.

Not about to give up on such a major investment, they installed top gun Ari Mervis as CUB boss and he soon flexed his muscles. Although consumption of beer may be falling since the days of Bazza McKenzie, he insists that the traditional beer brands still hold the lion's share of sales and while trends will come and go, the biggies are here to stay.

Mervis implemented his first major marketing strategy and fortunately it has worked. When he took on the job, supposedly he spent the first 100 days visiting all his volume customers. At the end of which he had a pretty clear picture of what they - and their public - wanted.

He was shocked that his top seller, VB, had  been dropping sales at ten percent a year since 2004 - from 30 to 12 percent market share.

His listening, and company research, pinpointed that the Aafter a hard day=s work...@ profile of VB was scorned because of its low alcohol content. So they pushed alcohol back up to its original 4.9 per cent late last year. Last week they were already able to report that after a decade of decline, VB made its first market share increase, 2 per cent. Which in the beer market is a lot.

How could any management let an iconic product get into such a mess in the first place? From what I can see it was the old tag game of following the market down. Big retailers - our monopolies Coles and Woolworths - were up to their usual games of destroying the market.

All those slabs of beer for below-cost margins, the introduction of own-brand copies - the ultimate plan is skimming off the commodity market. Just like they are doing with bread, milk, soft drinks, cereals and hundreds of other basic products.

Of course breweries have their own duopoly nowadays, between CUB-SABMiller and Lion. Having seen the damage that reckless discounting can do to their brands, they claim to have become more cautious.

There is increasing emphasis on premium, imported and craft beers. Once-famous brands that have been out of the spotlight for decades, could return. Who knows, we might yet be invited to the Foster=s birthday party.

ray@ebeatty.com;