The Motley Fool

VB Spin-off canned

Foster’s has dumped the Victoria Pale Lager brand less than two years after introducing it.

Despite a national billboard campaign and more than $6 million in marketing, Foster’s has decided to focus on resurrecting the VB brand as well as Foster’s top five selling beers, according to The Sydney Morning Herald.

At the time of the launch in November 2011, Foster’s management were hoping that the new beer would win beer drinkers back. Sold in an embossed VB stubby-shaped bottle, Victoria Pale is the first label to be discontinued since Foster’s was taken over by giant brewer SABMiller more than a year ago.

Fosters relaunched the VB brand late last year, lifted the alcohol content back to 4.9% from 4.6% and reinstated its popular “hard earned thirst” advertising slogan. The previous drop in alcohol content caused an outcry from loyal drinkers and saw VB lose market share for many years.

The renewed focus and marketing of VB seems to have turned the decline around. Sales by volume increased by 2% in the last quarter of 2012.

Long term decline

The problem for Foster’s is that there is an increasing variety of new alcoholic beverages coming onto the market, and consumption of beer has been steadily falling since the 1960’s. Data from the Australian Bureau of Statistics shows that consumption of beer has fallen from 76% of total alcohol consumption to around 42% in 2011. Wine has surged from just 12% to 37% of the market, while spirits (including ready-to-drink brands), increased from 12% to 20%.

The steady rise of wine is good news for listed producers, Treasury Wine Estates (ASX: TWE) and Australian Vintage (ASX: AVG). Coca-Cola Amatil (ASX: CCL) has also announced plans to get back into beer from December 2013, with the aim of capturing 15% of the premium beer market, which may have a brighter future than the overall beer market.

The Foolish bottom line

For Foster’s to concentrate on its core and flagship brands appears to make sense. As the SMH reports, Victoria Pale Ale had become an unnecessary distraction for the company.

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The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn’t own shares in any companies mentioned.

 

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