MENU

Victoria Bitter retakes the throne

Carlton & United Breweries’ (CUB) Victoria Bitter brand has reclaimed the title as Australia’s bestselling beer, giving parent company SABMiller plenty to smile about.

Since acquiring CUB – which was then known as Fosters – almost 18 months ago for $12.3 billion, it was reported last night that the Australian brewer had driven a 166% increase in earnings from its Asia-Pacific division, to a total of $5.92 billion for the 12 months to March 31. Meanwhile, group revenue increased by 62%.

Whilst Carlton’s sales by volume decreased by 13% across the year, this result was heavily impacted by the loss of the rights to foreign premium brands such as Corona and Stella Artois. However, two consecutive quarters of growth for its flagship brand Victoria Bitter aided the company towards an increase in sales volumes of 3% for the fourth quarter (excluding the loss of external brands).

Returning VB to “full flavour and full strength” saw the brand recover its position as the bestselling brew as sales of other core brands such as Crown Lager and Carlton Dry also increased.

CUB and SABMiller aren’t the only beverage companies smiling recently. Treasury Wine Estates (ASX: TWE) reported an increase in net profit after tax (NPAT) of 30.8% for the first half, which has resulted in the company’s shares climbing 17.1% since the beginning of March. The company is also expanding its New Zealand wine brand Matua Valley in Europe, with a number of retailers agreeing to stock the brand’s vintages, signaling further growth still to come.

Meanwhile, one of CUB’s much smaller competitors, Gage Roads Brewing  (ASX: GRB), has more than tripled its value over the past 12 months to 18c per share with a total market capitalization of $71 million. In its half year report, the company announced an astonishing 736% increase in NPAT whilst total volume increased by 27%.

Foolish takeaway

VB’s retaking of the throne as Australia’s bestselling beer is a good sign for the brewer, but it’s only a stepping stone for the company in the long-term. With Coca-Cola Amatil (ASX: CCL) re-entering the beer market in December as part of a joint venture with Yellow Tail wine maker Casella, CUB will be faced with heavy competition. As such, the company is solidly focused on cutting costs – aiming for $180 million in annual cuts by 2015, according to The Australian – and in search of “sustainable top-line growth”, which it will need to prevent CCA from taking too much market share.

In the market for high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading:

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 contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.