Japan & Australia: Asahi offers to divest a number of cider and beer brands to have CUB deal approved by ACCC

Asahi has told the ACCC it will divest a number of cider and beer brands if the A$16 billion CUB deal is allowed to go ahead, the Australian Brews News reported on February 28.

The Japanese firm has addressed competition concerns raised by the competition watchdog last year by offering to sell its Strongbow, Bonamy’s and Little Green cider brands, as well as Stella Artois and Becks, to purchasers approved by the ACCC.

The ACCC is now asking for industry views on the divestment plan, insisting it has still not made a decision on the deal.

In a media statement Asahi said it was “working closely” with the ACCC to address the concerns raised.

It said that the cider brands it is proposing to sell equate to 20 per cent of the Australian cider market – with Strongbow at 18 per cent. It will only sell the brands if the ACCC agrees to the CUB acquisition.

Asahi Beverages chairman Peter Margin stated in a media release that the company respected the ACCC’s need for a “thorough process”.

“Asahi’s acquisition of CUB is a significant one and we have always expected that the review process would take some time,” he said.

“We are working towards completing the deal as soon as possible once we have received regulatory approvals from both the ACCC and the Foreign Investment Review Board.”

ACCC chair Rod Sims warned that today’s announcement does not mean the watchdog has accepted the deal.

“The release of the proposed divestment undertaking for public comment should not be interpreted as a signal that the ACCC will ultimately accept the undertaking and clear the transaction,” he said.

“We are following our usual practice of publicly consulting on a proposed divestment package.

“We are seeking feedback from industry participants on whether the divestment package will be sufficient to address the competition concerns.”

The ACCC raised concerns about the deal in December last year, saying it would result in significant consolidation of the cider market, and a reduction of competition in the beer market.

It said that while Asahi has a low market share, it appears to be a “vigorous competitor” to the two major beer suppliers Kirin-owned Lion and AB InBev-owned CUB, which would be removed if the acquisition proceeds.

Sam Reid, chair of industry body Cider Australia told Brews News that the organisation was pleased that concerns about cider competition were being taken into consideration.

‘We’re pleased that the ACCC listened to and acted upon our initial submission and recognised that cider is its own distinct category, with its own set of drinkers,” he said.

“We’re slightly surprised by, but overall pleased, with this outcome.

“The divestment of these brand will take their combined share to below 50% of the category, and ensure continued vigorous competition within the cider category moving forward which can only be a good thing for Australian cider drinkers.”

Many of Cider Australia’s members work in the 100 per cent Australian-grown space, and Asahi’s reduction in this area might be beneficial to Australian-owned cider makers.

“This looks like it will ensure that competition remains vigorous in the cider category,” Reid explained.

The divestment of the brands might also be an opportunity for other entrants to the market, he said.

Heineken, which licences the Strongbow brand, could use the move as an opportunity to take its brand under direct ownership, which would also give it a platform from which to launch other brands in the Australian market.

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