Brewers' profits rise as beer drinkers pay more, drink less

Beer drinkers' more sophisticated palates are boosting the bottom lines of the two major brewers despite an overall drop in market volume.Asia Pacific Breweries, owner of DB Breweries, says pretax earnings are up 52% for the first half, due mainly to a 4% volume gain, favourable sales mix and the appreciation of the New Zealand dollar.Overall, APB reported group revenue grew to $S1.25 billion for the six months to March 31 – 17% higher than the same period last year, mainly due to higher volumes.

Beer drinkers’ more sophisticated palates are boosting the bottom lines of the two major brewers despite an overall drop in market volume.

Asia Pacific Breweries, owner of DB Breweries, says pretax earnings are up 52% for the first half, due mainly to a 4% volume gain, favourable sales mix and the appreciation of the New Zealand dollar.

Overall, APB reported group revenue grew to $S1.25 billion for the six months to March 31 – 17% higher than the same period last year, mainly due to higher volumes.

Last week, Kirin-owned Lion Nathan reported a revenue increase of 2.3% in the final quarter of 2009, despite a 3.3% drop in alcohol consumption and a 5% drop in the beer market. It said volumes rose 0.4% against the declining trend.

The Brewers Guild, representing “craft” beer producers, says sales are up 11% and premium beers now account for 8% of the market.

Both DB and Lion are among the guild’s 50 members, who brew around 6.2 million litres of premium beer a year.

In its announcement, DB’s managing director, Brian Blake, also attributed the improving financial performance to innovative products, better operating margins and significant cost savings as a result of restructuring.

“During the past six months we’ve successfully launched Tui Blond and Monteith’s Crushed Apple Cider to the market. The latter is also selling extremely well in Australia," he said.

“Our other flagship brands, namely Heineken, the wider Monteith’s and Export ranges, plus Tui and Tiger, continue to perform well in the local market.”

Hard going

However, Mr Blake says the local market is still hard going and the next six months is not a time to be complacent.

“There’s still a lot of uncertainty in the market and many hospitality operators will find the traditionally quieter winter period challenging due to a slow post recession recovery.

“The year head looks more positive, not only for DB Breweries, but the wider industry. Events such as Rugby World Cup 2011, for which Heineken is a worldwide partner and the official beer, will greatly assist us all in returning to more stable and profitable environment.”

Sales and profit figures for DB were not broken out, but APB’s group attributable net profit before exceptional items rose 48% to $S134.7million.