Coopers warns on rising prices
The twice-a-year jump in the excise on beer could cause a deep wedge between Australian drinkers and their favourite glass of amber, forcing shoppers to look for cheaper alternatives, such as cask wine.
Coopers managing director, Tim Cooper, the head of the nation's biggest Australian-owned brewer, has warned that beer is price sensitive, and the days when Australians would beer drink regardless of price were over.
"Our worry is now that beer is . . . an elastic commodity and consumers can shift to other products like cask wine," Dr Cooper said on Friday.
"We can't just forever be increasing the price of beer and expecting people to keep on buying it in the same volumes."
His comments come as beer sales in Australia are stubbornly stuck at their lowest since World War II, with sales volumes falling for the past three years. Adding to the pressure on beer sales are threats from other beverages, such as cider.
For the time being, the slump in beer does not seem to be hurting Coopers as it brushes aside the troubles in the sector to post record turnover, profits and sales volumes.
Coopers, which has about 4.5 per cent of the Australian market, said that in the year to June 30 its turnover rose by 16.1 per cent to $216 million. Profit increased by 13.4 per cent to $30.8 million, and beer sales were up 8.3 per cent to 69.7 million litres - a rise from 64.3 million litres in 2012.
Dr Cooper said three-quarters of that volume was driven by strong contributions from its new international brands Carlsberg, Sapporo and Kronenbourg, while sales revenue in the brewing products division, which includes Coopers DIY home brew kits, was up 7 per cent.
Strong sales for its home brew division was driven by the acquisition of Mr Beer in the US, which increased revenue by 12 per cent. Mr Beer contributed $2 million to Coopers' bottom line.
Coopers said it had absorbed the August 1 beer excise increase for its packaged beers, which would have added roughly 12¢ a case to the price. It was the first time Coopers had absorbed the tax in more than six years. Dr Cooper said the decision had helped support volume early in 2013-14, and the extra sales should potentially help to cover some of the lost margin.
"This is certainly helping volumes, but of course it's at the expense of price," he said. He said the "jury was out" on the benefits of absorbing the excise.