Coke to be beer baron again
On December 17, the chains that have kept the fizzy drink maker out of the lucrative brewing industry for two years will be severed and Amatil can return to the sector it has been excluded from since selling its half-share in a beer business to global player SABMiller.
The preparations for that day are already in full swing. Coca-Cola Amatil's announcement on Tuesday of an extension of its Project Zero cost initiative to $90 million in savings over the next three years can be viewed as part of its plan to flex its productivity muscle in the lead-up to its brewing reboot.
Although beer volumes in Australia are at their lowest since World War II, the category continues to generate strong returns for brewers selling premium or craft beers.
It's these types of beers that Coca-Cola Amatil and Mr Davis cut their teeth on with SABMiller, selling a portfolio of niche beer brands including Peroni and Miller Chill.
Coca-Cola Amatil continues to invest in its beer capabilities - mainly the retention of key brewing staff - despite being nearly a year away from re-entering the market, but it will be worth it if Mr Davis can announce on December 17 a slew of licensing and distribution deals with overseas and local beers.
CCA is in talks with foreign beer companies to line up some deals, with unattached US and Belgian labels the most likely partners.
Frequently Asked Questions about this Article…
On December 17 Coca‑Cola Amatil (CCA) expects to be able to re‑enter the brewing market after chains that have kept it out are severed. For everyday investors this matters because CCA plans to announce licensing and distribution deals and will be able to compete again in a beer category that still delivers strong returns for premium and craft labels.
CCA was excluded from the brewing sector after it sold a half‑share in a beer business to global brewer SABMiller. That sale meant CCA stepped away from brewing until the contractual or structural restrictions are lifted.
Project Zero is CCA’s cost initiative. The company has extended it to target $90 million in savings over the next three years. The article notes this productivity push can be viewed as part of CCA’s broader plan to strengthen its position ahead of its brewing reboot.
Overall beer volumes in Australia are at their lowest since World War II, but the premium and craft beer segments continue to generate strong returns for brewers. Those higher‑value segments are the ones CCA and its management know well.
When CCA sold a half‑share to SABMiller it sold a portfolio of niche beer brands that included Peroni and Miller Chill, among others mentioned in the article.
CCA is investing in its beer capabilities even before formally re‑entering the market. That includes retaining key brewing staff and lining up licensing and distribution deals with overseas and local beer brands.
The article says CCA is in talks with foreign beer companies and that unattached US and Belgian labels are the most likely partners to provide licensing or distribution opportunities.
Investors should watch for formal announcements of licensing and distribution deals (expected around December 17 in the article), updates on Project Zero savings execution, and confirmation that CCA is retaining key brewing staff and securing partners from the US, Belgium or other markets.
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