Coopers warns on rising prices
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.
Frequently Asked Questions about this Article…
Beer prices in Australia are rising due to the twice-a-year increase in the excise tax on beer. This has made beer a price-sensitive commodity, leading consumers to consider cheaper alternatives.
Coopers is concerned about rising beer prices because beer is a price-sensitive commodity. As prices increase, consumers may shift to cheaper alternatives like cask wine, which could impact beer sales volumes.
Coopers Brewery has absorbed the recent excise increase for its packaged beers for the first time in over six years. This decision was made to support sales volume, even though it affects their pricing strategy.
Beer sales in Australia have been at their lowest since World War II, with sales volumes falling for the past three years. This decline is partly due to competition from other beverages like cider.
The excise tax increase on beer can lead to reduced consumption as beer becomes more expensive. Consumers may shift to cheaper alternatives like cask wine or cider.
Coopers has managed to maintain strong sales by posting record turnover, profits, and sales volumes. This success is largely driven by strong contributions from its international brands like Carlsberg, Sapporo, and Kronenbourg, as well as its DIY home brew kits.
Despite challenges in the beer market, Coopers Brewery has reported record turnover, profits, and sales volumes. Their success is partly driven by strong contributions from international brands and their home brew division.
The acquisition of Mr Beer in the US significantly boosted Coopers' home brew division, increasing revenue by 12% and contributing $2 million to Coopers' bottom line.
International brands like Carlsberg, Sapporo, and Kronenbourg have significantly contributed to Coopers Brewery's sales volume, accounting for three-quarters of their growth.
Coopers absorbed the August 1 beer excise increase for its packaged beers, which would have added roughly 12 cents a case to the price. This decision was made to support sales volumes early in the 2013-14 period.
Coopers' home brew division has seen strong sales, particularly due to the acquisition of Mr Beer in the US, which increased revenue by 12% and contributed $2 million to Coopers' bottom line.
By absorbing the beer excise increase, Coopers hopes to support sales volumes, which could potentially help cover some of the lost margin from not passing the cost onto consumers.
Continuously increasing beer prices may lead to a decline in sales volumes as consumers opt for cheaper alternatives. This could negatively impact breweries that rely heavily on beer sales.
Coopers holds about 4.5% of the Australian beer market.
Coopers is currently evaluating the benefits of absorbing excise tax increases to support sales volumes. The long-term strategy will depend on balancing volume growth with pricing and margin considerations.
While absorbing the excise increase has helped support sales volumes, Coopers acknowledges that the long-term benefits are uncertain, as the 'jury is out' on the overall impact.
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