asahi boss

Asahi hit with another setback in CUB deal

November 25, 2019
By Alana House

Asahi has hit another roadblock in its bid to purchase Carlton & United Breweries, with the ACCC delaying its decision on the deal for another week.

It was initially scheduled to hand down a ruling at the end of October, but requested additional information from Asahi and postponed its decision until December 5. It has now pushed the date back to December 12.

The Australian Financial Review has speculated that the reason for the delay is concern that the deal will give the combined company control of more than 50% of the local cider market.

If so it could require Asahi to divest some of its cider interests, which include CUB brands Strongbow, Bulmers, Mercury and Pure Blonde, plus Asahi’s Somersby.

Despite the delays, Asahi boss Akiyoshi Koji says the $16billion price tag for Carlton & United “was not that expensive” given Australia’s population growth.

The Asahi Group CEO is bullish on the future of premium beer sales both in Australia and globally.

“We are expanding with the goal of being No. 1 for the premium beer segment in every geographic area we’re doing business,” Koji told Bloomberg. “The world is our market.”

Bloomberg adds: “Koji first asked to buy the Australian brands in a meeting earlier this year, but [AB InBev CEO] Carlos Brito didn’t commit at the time as the Belgian brewer was preparing a mega-IPO of its Asian operations.

“When that plan fell apart in July, Koji spied an opening and immediately contacted Brito. After a weekend and a week of meetings and nightly calls, they finalised a deal that stunned markets — as well as AB InBev’s own bankers.”

Asahi took on a $16billion bridge loan to pay for CUB and “is hoping that cash from that newly-acquired business will help pay down” its liabilities.

Koji has driven more than $US20 billion in acquisitions for Asahi in the past four years.

Analysts have expressed concerns about the prices Asahi has paid for its most recent deal, with the price paid for CUB being 15 times EBITDA, according to Bloomberg calculations. 

Asahi currently has a 3.5% share of the Australian market, with the deal giving it just over 50% of the market. The next nearest competitor is Lion at 37%.

According to The Australian, the ACCC’s main concern with the deal is “its impact in creating barriers to entry of new boutique breweries”.

The ACCC previously looked at the beer market as a whole, but its believed this time it will consider the deal’s impact on the craft sector separately, in relation to tied hotels.

“It has long expressed an interest in tied hotel arrangements in which the big brewers use their market power to prevent pubs from carrying other brands,” the newspaper noted.

“The Asahi takeover is a good opportunity to find out more about those arrangements.”

Asahi boss says the future is bright for premium beer

The Asahi boss told Bloomberg he is confident the beer premium segment still has room to grow compared with the broader industry.

Asahi boss Asahi Super Dry

Rather than diversifying into cannabis as other drinks companies have done, Koji’s aim is to grow Asahi Super Dry into a global brand, and build up the brewer’s global presence to four or five hubs from its current three of Japan, Europe and Australia.

He added to Reuters that non-alcoholic beers were a major sector for the company moving forward. Sales of some of the group’s European alcohol-free brands have grown more than 30%.

“We want to make non-alcohol beers a revenue pillar,” he said. “Japanese technology is being used quite a bit among these non-alcohol beers, to make good products.”

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