No need to fear Foster’s foreign takeover

She'll be right, mate

‘Tastes like an angel cryin’ on yer tongue,” announced a bronzed Paul Hogan in a series of Foster’s television ads screened in Britain in the mid-1980s. But back at home, Aussies were losing their thirst for the “golden throat charmer”.

Australians consumed an average of 469 tinnies of beer each in 1979. Three decades on, this has slumped to the equivalent of 285 tinnies.

We are quaffing an extra 10 bottles of wine a year and half a litre of spirits. But beer remains, for now, Australia’s alcoholic beverage of choice, and we’re more than capable of getting a little sentimental about the amber nectar.

The decision by the board of Foster’s to accept a $12.3 billion takeover offer from the the Anglo-South African brewer SABMiller has prompted concern about the demise of yet another Aussie “icon”.

It seems we can add Foster’s brands such as Victoria Bitter and Carlton to the growing heap of formerly Australian-owned brands such as Arnott’s biscuits and Aeroplane jelly.

The takeover of Foster’s, which controls about 48 per cent of the Australian beer market, means Australia’s two biggest brewers will be foreign-owned. Lion Nathan, with 43 per cent of the market, and the brewer of Toohey’s, XXXX and Hahn, was taken over by the Japanese beverage giant Kirin in 2009.

Those sentimental about the idea that Australia should continue to “make stuff” will also be concerned. While no decision has been announced about the future of workers at the Foster’s brewery in Abbotsford, Melbourne, it is likely a foreign-owned firm will have fewer qualms about shifting production elsewhere to cut costs.

So should we mourn the passing of another Australian brand?

Economists think not, having long extolled the virtues of the “gains from trade”. According to this idea, the world gets rich when countries specialise in producing those products and services in which they have a relative cost advantage. For countries with low labour costs, such as Asian nations, this means producing relatively labour-intensive goods such as textiles and simple manufactured goods.

For countries such as Australia, with higher labour costs, it means producing higher value-add services, along with mining and farming goods to exploit our abundance of land and minerals.

When countries export goods on which they earn a high return and import more cheaply than it would have cost them to produce, this leaves more money in the tin to buy more goods and services. When you can buy more for a given dollar of income, you have raised your standard of living.

Over the past few decades, Australians have enjoyed the benefit of cheap imports of textiles and gadgets, contributing to higher living standards.

There was a day when the idea of a famous Australian company being bought by foreigners would have sparked street protests, but today the news is largely relegated to the business sections of newspapers. Perhaps a few remember that many other loved Australian brands such as Holden and Vegemite were American-owned from the start – by General Motors and Kraft.

And so we’ll continue to sip VB, in front of a television imported from South Korea, in a T-shirt manufactured in China and mumble about the rising cost of living, without realising it could have been much worse.

Some things are just quintessentially Australian, after all.

THE IRVINE INDEX

107 litres
Beer consumed in 2009 by the average Australian aged over 15, equivalent to 285 tinnies — the lowest since World War II.

176 litres
Beer consumed in 1979 by the average Australian aged over 15, equivalent to 469 tinnies — the peak of our beer-swilling days.

29 litres
Wine consumed in 2009 by the average Australian aged over 15, equivalent to about 39 bottles — the highest on record.

22 litres
Wine consumed in 1979 by the average Australian aged over 15, about 29 bottles.

2.04 litres
Spirits consumed in 2009 by the average Australian aged over 15, comprising 1.3 litres of spirits only and 0.7 litres pre-mixed.

1.44 litres
Volume of spirits consumed by the average Australian aged over 15 in 1979.

48%
Share of Australian beer sales belonging to Foster’s brands, including VB, Carlton and
Crown Lager.

43%
Japanese-owned Lion Nathan’s share of Australian beer sales, including Toohey’s, XXXX, Hahn and James Boag.

4%
Market share of Coopers, which will become the biggest Australian-owned brewer after the takeover of Foster’s.

Sources: Bureau of Statistics’ “Apparent Consumption of Alcohol: Extended Time Series”; fosters.co.uk

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