Asahi has revealed the success of Great Northern was one of the big reasons it decided to buy CUB last week.
Executive chairman of Asahi Beverages Peter Margin told the Australian Financial Review he was impressed by CUB's product innovation and marketing sizzle in elevating Great Northern to one of the biggest-selling beers in the country.
The booming sales of Great Northern, combined with regaining distribution of Corona from Lion, has lifted CUB's market share to 48.8%.
He said it gave Asahi confidence by showing there was life in the beer category.
"I'm not sure the rest of the market has woken up to what has happened,'' Margin said.
According to IRI statistics, Great Northern was the equal top selling beer at Australian retail outlets in the year ending June 30, alongside Carlton Carlton Draught and Carlton Dry.
Great Northern had 12% market share, with XXXX on 9.2%, VB on 7.3% and Corona on 6.9%.
Other contenders in the top 15 list included Coopers at number 7), Asahi at number 12 and Iron Jack at number 14.
Margin also noted that the Asahi's eponymous beer and Peroni brand have been generating double-digit growth for the past couple of years.
"They are in a bit of a sweet spot to some extent,'' Margin noted. "They've made life pretty comfortable for us.''
Margin said that after being in Australia for more than a decade, with a workforce of 2100 people, Asahi felt confident in making the acquisition.
"It would be fair to say when they made their first entrance into the Australian market they had limited understanding and didn't have the people on the ground they've now got."
Street Talk reports it took just three phone calls to seal the deal to buy CUB.
"It is understood the talks started with a phone call from AB InBev boss Carlos Brito to his counterpart, Asahi's Akiyoshi Koji, in April, and progressed steadily into June when Asahi made its $16 billion binding bid," it said.
"AB InBev rejected Asahi's binding offer to proceed with a mooted IPO of a bigger Asia Pacific business, which included CUB, only for Brito to again pick up the phone about a week ago to see if Koji was still interested.
"The third important phone call between the two CEOS, which would see the knockout deal signed in London last Friday."
Why AB InBev sold CUB
Crikey is reporting that Fosters was one of the big reasons AB InBev sold CUB.
An opinion piece by Glenn Dyer kicks off with: “This is a story about how Foster’s went from Australian icon to an orphan in the balance sheet of the world’s biggest brewer in just nine years — the one asset a desperate giant could see to relieve pressure from bankers nervous about a US$1 billion debt pile.”
He goes as far as adding: “Market reports and analysts think that part of the reason [for the Budweiser APAC IPO collapse] was the presence of the no growth, weak performance of Foster’s compared to the beer brands in growth markets like Vietnam and China that were in the sale.”
AB InBev noted in a statement on Friday that the divestiture of CUB would "allow the company to create additional shareholder value by optimising its business at an attractive price while further deleveraging its balance sheet and strengthening its position for growth opportunities”. t
The company also said that "all of the proceeds from the divestiture of the Australian business will be used by the company to pay down debt".
Divestments on cards following CUB buyout
There’s speculation the $16 billion deal to buy CUB will force Asahi to divest some of its beer brands.
The CUB acquisition has raised Asahi’s market share in Australia to above 50%, which has caught the attending of the Australian Competition and Consumer Commission.
"From our point of view it's just head down at the moment,'' Margin told the AFR. He said Asahi would concentrate on supplying the required information and then let the regulator get on with its job.
"We will begin a public review once we receive a submission,'' a spokesman for the ACCC said on Monday.
Additionally, it will continue to look closely at beer distribution arrangements in Australia.
"The ACCC continues to take an active interest in conduct which raises any competition concerns in beer distribution arrangements, as it does across a wide range of industries across the Australian economy,'' the competition watchdog said.
The Foreign Investment Review Board will also take a close look at Japanese brewer Asahi's financing and tax mitigation practices in Australia before it approves the $16 billion bid to buy CUB.
The sale has been welcomed by Australia's beer bosses, with
Coopers Brewery managing director Tim Cooper saying it "will be good for the beer market in Australia".
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