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Ready-To-Drink Spirits Rebound After Battering

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A JOINT venture between international spirits house Bacardi Martini and Lion Nathan has extracted a 9 per cent sales increase from its range of rum, gin, vodka and ready-to-drink mixers in the midst of the Federal Government’s alcopops tax and double-digit growth for premium beer.

Bacardi Lion recorded sales of $63.07 million for the 12 months ended September 30, 2008, up from $57.87 million in the previous year and $58.3 million of sales in 2003-04.

Formed in 2003, the Australian beverage alliance sells spirits brands including Bacardi Superior Rum, Bombay Sapphire Gin, Dewar’s Scotch, Grey Goose vodka, Grand Marnier and popular RTDs Bacardi Breezer and Bacardi & Cola.

The joint venture’s slim bottom line – it recorded a profit of only $1 million for 2007-08 against $667,000 in 2006-07 – is partly due to royalties Bacardi Lion pays out to its shareholders.

The business is charged a royalty by Bacardi Martini for the use of its spirits brands in Australia, while the joint venture also hands over a manufacturing fee to Australasian brewer Lion Nathan for use of its production facilities.

The 2007-08 result included five months of the Federal Government’s tax on premixed drinks, an impost introduced in April 2008 that placed a 70 per cent tax rise on RTDs. It brought the tax on RTDs, also known as alcopops, in line with the tax on full spirits and raised $424 million in government revenue in its first 12 months.

Stephen Riden, manager, information and research for the Distilled Spirits Industry Council of Australia (DSICA), said the industry noticed a 30 per cent drop in the sale of RTDs in the immediate wake of the alcopops tax being introduced. ”This was offset by a 16 per cent lift in the alcohol sold as spirits and a 5 per cent jump in sales for beer,” Mr Riden said.

”Since then beer sales have stayed at that higher level, RTD growth is now back into double digit and bottled spirit sales are declining.”

Mr Riden said consumers eventually switched back to RTDs, lured by the products’ convenience as a drink product.

Citi analyst Andy Bowley said: ”RTD volumes have returned to their pre-tax-hike, double-digit growth trajectory. Beer doesn’t appear to be losing out, suggesting overall alcoholic beverage market growth.”

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Friday, September 22, 11:36 am

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