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Coca-Cola Amatil slurps up Fijian brewer

Coca-Cola Amatil (ASX: CCL) has signed an agreement with Fijian brewer Vonu Beer to acquire all intellectual property and worldwide trademarks. The deal will allow Coca Cola to bring the premium, hand-crafted, Vonu Pure Lager to Australia and New Zealand from late 2013.

Vonu Beer was started by two Fijian entrepreneurs and has the slogan “Pure Fiji rainwater turned into beer”. The deal has strengthened Coca Cola’s stable of beers for when it re-enters the Australian and New Zealand beer and cider market in December.

Earlier in 2013 Coca Cola formed a 50-50 joint venture with Yellow Tail winemaker Casella to brew and distribute a range of international beers owned by the world’s seventh largest brewer, Molson Coors. It will enter the market on December 16 by distributing Molson Coors’ brands such as Carling, Coors Light and Blue Moon, and now Vonu Premium Lager.  The partnership is targeting the $1.4 billion profit pool in Australia and New Zealand’s $11 billion beer and cider market.

Coca Cola has targeted $50 million in profit from the new venture within the first five to 10 years, with more acquisitions or deals expected in coming months. Coca Cola paid NZ$5 million for the rights to brew the Fijian beer and will invest nearly F$30 million (AU$17 million) in the plant and associated equipment.

In addition to the new beer business, Coca Cola distributes or makes a range of spirits in the Australian Market. It owns the Jim Beam, Canadian Club, Maker’s Mark, Galliano, Bakers and Famous Grouse brands among a number of smaller labels. Sales of sprits grew strongly in 2012/13 with a positive outlook for 2013/14.

Foolish takeaway 

Coca Cola struggled in the 2012/13 financial year, largely due to the aggressive discounting of rival Pepsi. Sprit sales were a highlight last year and the company will hope that the new beer and cider brewing business will be equally successful in 2013/14. The company appears to be growing its stable of brands under management which will hopefully translate to strong sales and profit when distribution begins in late 2013.

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Motley Fool contributor Andrew Mudie owns shares in Coca-Cola Amatil.

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