MENU

Cascade loses the Tasmanian tiger

Carlton & United Breweries (CUB) has relaunched its Cascade beer product range, with plans to double sales within four years.

CUB wants to tap into the booming niche market for craft beer, something it has failed to leverage for ten years. As part of the re-launch of Cascade, the Tasmanian tiger is gone from the bottle, and replaced by a picture of the brewery, Australia’s oldest, while the beer will now be sold in brown bottles instead of green.

According to Cascade Brewery Co brand manager Louise Thiele, CUB had neglected Cascade, which has seen sales decline by 10% each year over the past five years. “CUB focused on brands we didn’t own outright,” Ms Thiele has told the Australian Financial Review (AFR). “We had lost focus – we absolutely admit that.” CUB was owned by Foster’s Group, but was taken over by SABMiller in December 2011 in a deal worth $12.3 billion.

SABMiller had been focused on turning around the decade long decline in Australia’s biggest beer, VB, but now wants to tap into the craft beer category, which has been growing at double digits for many years. But the company will have its work cut out for it, with Lion’s James Squire beer holding a 31% share of the market, compared to around 4% for Cascade. Additionally, beer consumption is at its lowest level in 66 years, according to the AFR, with consumers drinking less, but more expensive beers.

Craft beer is a small part of the total beer market, representing just 2% of all beer sales, but 3.5% of revenues.

CUB will also have to contend with giant retailers Woolworths (ASX: WOW) and Wesfarmers (ASX: WES), who dominate Australia’s beer and wine market with brands including Dan Murphy’s, First Choice, Liquorland and BWS. Coca-Cola Amatil (ASX: CCL) is also counting down the days until it too can re-enter the $11 billion Australian beer market. The company sat out of the market for two years, after selling its brewery joint venture to SABMiller in 2011.

Foolish takeaway

CUB could see loyal Cascade customers switch to other brands, thanks to the branding changes. Add in more competition from CCA and Lion Nathan, and CUB faces a tough market to try and raise market share.

Beer not to your liking? Want to pick up a non-bank high dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool writer/analyst Mike King owns shares in Coca-Cola Amatil and Woolworths.

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.