New Zealand: DB Breweries released new ready-mixed drinks aiming to restore profit margins

DB Breweries wants to counteract the rogue competition in the traditional beer market by pouring in some new ready-to-drink products which are intended to help him recover from week profit margins, The Dominion Post published November 20.

DB Breweries which is best known for its Monteith's, Tui and DB beer brands, has introduced a range of new ready-to-drink beverages (RTDs), including the vodka-based Stark, which comes in feijoa and apple, lemon and lime and mandarin flavours. It has also introduced a white rum-based Cuban Cut and a new Amstel Premium Lager. It introduced its first RTD, Barrel 51, in March.

Managing director Brian Blake said DB had been ambitious in growing its share of the RTD market. He would not comment on how DB's strategy fitted with news three weeks ago that its parent company, Singapore-based Asia Pacific Breweries, had sought regulatory approval to buy Michael Erceg’s RTD empire, Independent Liquor.

Mr Blake referred all questions on Independent Liquor to Asia Pacific Breweries in Singapore.

"DB Breweries is absolutely focused on growing its RTD business and we are continuing to put new products on the market," was all Mr Blake would say on the matter.

Other parties looking at Independent include Lion Nathan, Foster's and private equity interests. DB's parent Asia-Pacific Breweries is said to be looking at a tie-up with Diageo.

Asia Pacific Breweries is 42.5 per cent owned by Dutch-based Heineken, and since delisting from New Zealand DB has not disclosed detailed financial information.

Asia Pacific Breweries recently filed accounts for the September year showing DB's pre-tax and interest profits dropped 10 per cent because of a 2 per cent decline in volumes, aggressive price-based competition and the weaker New Zealand dollar. Profits are reported in Singaporean dollars.

Mr Blake said that accounting for exchange rates, earnings were down about 4 per cent in New Zealand dollars.

DB's full-year earnings for 2005 were up 14 per cent, after 16 per cent growth in 2004 and 13 per cent growth in 2003. Overall, Asia Pacific Breweries tax-paid profits were up 16 per cent to SG$254.7 million (NZ$245.6 million).

Mr Blake said DB's volumes had taken a hit after it tried to turn the tide of a bitter price battle with rival Lion Nathan this year.

In the three months to June, DB had tried to get its own prices and margins up by reducing promotional discounts. However, DB gave up after it cost it 4 per cent in volumes. DB has about 36 per cent share of the beer market, Lion about 52 per cent and Independent Liquor about 4 per cent.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .