E-Malt.com News article: Australia: Coopers Brewery sees profit decline on intensifying competition, higher barley and energy costs

Intensifying competition in a crowded beer market, combined with higher barley and energy costs have sliced into the profit of Australia's biggest independent beermaker, Coopers Brewery, The Sydney Morning Herald reported on November 8.

A 2 per cent increase in beer sales was not enough to compensate for the challenges, with the brewer recording a 31.4 per cent fall in its 2018-19 net profit to A$16.4 million. Coopers' pre-tax profit fell 32.7 per cent to A$23.1 million.

"The reduced profit was attributable to a changing sales mix, higher barley prices and more competitive market conditions with some segments showing declines in retail pricing," said Coopers managing director and chief brewer Tim Cooper.

"The latter renders difficult our ability to recover higher excise duties and costs arising from the imposition of container deposit schemes," he said.

Container deposit schemes cost Coopers about A$3 per carton of beer, but stiff competition in the Australian beer market makes it challenging for the beermaker to fully recover those costs from consumers.

Drought, which has hit the nation's barley production, has pushed up the price of the key beermaking ingredient, with Coopers' barley costs rising by about A$600,000 in 2018-19. Coopers' energy costs rose by about A$1 million in 2018-19, or 14 per cent. Interest and marketing costs were also higher.

"We had a few things go against us, we're hoping really that a number of these things will not repeat, or will at least be more manageable during this current financial year," Dr Cooper told The Age and The Sydney Morning Herald.

The company is budgeting for a bigger profit in 2019-20, with benefits expected from recent product launches and lower marketing costs.

"There's a few rainbows there for us, and all things being equal we should be delivering a better result this financial year," Dr Cooper said.

He also said that the company had had "a glory run up until 2017, where we had growth for 24 years".

But the challenges for Coopers and other brewers have escalated in recent years, as more container deposit schemes were introduced, costs have risen and competition in the market has intensified.

Deep discounting on packaged beer continues, and there has been a surge in craft beers. At the same time, liquor makers are making significant attempts to woo beer drinkers to other alcoholic beverages. Also, beer drinkers are drinking less than they used to.

The Australian beer industry has grabbed headlines in recent months after it was announced in July that Japanese brewer Asahi had struck a A$16 billion deal to buy Australia's biggest brewer, Carlton & United Breweries, off its European-based owner Anheuser-Bush InBev (AB InBev). The deal is yet to receive regulatory approval, but is expected to do so.

Coopers is a family business headquartered in Adelaide, where it was established 157 years ago. The company is currently led by members of the fifth generation, while members of the sixth generation have joined the business in recent years.

Coopers has about 5 per cent of the Australian beer market. More than 90 per cent of the company's shares are owned by direct descendants of its founder, Thomas Cooper.


08 November, 2019