Coca-Cola Amatil slurps up Fijian brewer

Vonu Beer is added to the growing stable of beers and cider distributed in Australia.

Andrew Mudie

Andrew joined the growing team of Motley Fool freelance writers in mid-2013 following years of personal development as a passionate self-taught sharemarket investor. At the time, Andrew was an engineer by trade, writer by hobby, and an investing nerd by passion who spent far too many breaks reading, writing and learning. Andrew’s first investing lesson came with his first stock selection in 2011 when takeover rumours caused a spike and subsequent plunge in the share price of Woodside and then the 21% fall in the market through mid-2011. The next four years of investing saw Andrew dabble in a vast array of strategies until settling on his favourite investment methodology, which is closely aligned with that of the Motley Fool: Fundamentals-based long-term buy-and-hold of great companies at great prices.

Published September 17, 2013 7:13 am AEST

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.

Looking for a larger dividend yield? 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 contributor Andrew Mudie owns shares in Coca-Cola Amatil.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.