Foster’s increased brand investment boosts performance

Australian beer company Foster’s, says increased investment in its brands and marketing have helped improve the company’s performance as it hopes to stave off a hostile takeover bid by SABMiller.

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Foster’s Group CEO John Pollaers says the year has been a “transformational” one for the company. It reported a loss of $89m AUD (£56.5m) for the year ending 30 June 2011, up from a loss of $464.4m AUD (£294.5m) last year.

The company reported a 5% fall in total net sales to $2.2bn AUD.

Foster’s plans to cut costs, in order to free up budget for increased marketing and brand investment.

It is also managing its promotional activity and has reduced supply to retailers selling its brands below cost to ensure the long term health of its brands and increased prices “to demonstrate confidence in category”.

Fosters has invested in an “exceptional insights platform” which Pollaers says will “drive new era of growth”.

Pollaers adds that its turnaround plan is “on track” and that the company has stabilised its market share reversing a long-term decline.

The demerger of its Treasury Wine Estates was completed in May 2011, which allows the company to focus on its beer and cider brands, which include VB and Carlton in Australia, and distribution of international brands Corona, Stella, Asahi and Bulmers

The company has rejected a $10m (£6m) bid from SABMiller, which owns Peroni and Grolsch.
The Foster’s lager brand is owned by Heineken in the UK and would not be affected by the potential takeover by SABMiller.

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