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Fuss over foreign Foster's depends on jobs

By: Trevor Chappell
27 June, 2011

Aussie consumers and workers may not be fussed whether or not iconic brewer Foster's is owned by foreigners.

Unless it costs jobs and ignores tradition.

Shareholders in Foster's may be torn between emotional attachment to an Australian brand and the potential money they can make from the sale of their shares.

London-based brewing giant SABMiller this week proposed a $9.5 billion takeover of Foster's, and there is speculation that other foreign brewers may also be interested in bidding.

Foster's produces well known beers such as Foster's Lager, Victoria Bitter and Carlton Draught.

A senior academic at the University of NSW says consumers are becoming used to Australian brands having foreign owners.

Other iconic Australian brands such as Vegemite, Arnotts, Holden and Tooheys trade on their Australian heritage despite being foreign-owned, said Dean Wilkie, a lecturer in marketing at the Australian School of Business at UNSW.

Having an Australian heritage is important because it can build an emotional connection between the consumer and the brand.

"Most consumers have probably experienced an international takeover of one of their favourite brands," Wilkie said.

"As long as (the foreign owners) don't mess with (the brand) too much, I think we're pretty much at ease with that."

As such, consumers were less likely to react badly to Foster's being taken over by SABMiller.

Wilkie said consumers form an attitude towards a brand based on various things.

When consumers learn that a brand like Foster's could be foreign-owned, some will form a negative attitude, and this negative attitude may grow if the foreign owner axes local jobs in favour of jobs offshore.

For other consumers, foreign ownership may not be an issue at all, with their attitude determined by things like positive product experience.

In the case of Foster's, for example, consumers might prefer its brands because they are on tap at the local pub, or because it was the first beer they had with their father.

Wilkie said the Australian image within Foster's was mainly associated with the Foster's Lager brand, which was more popular in Britain than in Australia.

Foster's had used the Australian lifestyle to sell its brand and give it meaning in the UK.

"It is rather appropriate that the British-based company - SABMiller - wants to take (Foster's) over," Wilkie said.

"Most of the amber nectar in the UK in reality comes from Manchester."

Wilkie said other beer brands in the Foster's portfolio such as VB, Cascade and Crown Lager were less reliant upon an Australian association.

"VB would have a stronger association as a blue-collar beer than an Australian beer," he said.

The union representing workers in the liquor and hospitality industry, United Voice, said foreign ownership of Foster's was not of concern unless it resulted in job losses and a lack of respect for history and tradition.

The Victorian secretary of the union, Jess Walsh, said iconic beer brands had been made at Foster's brewery at Abbotsford in Melbourne since 1904.

"We're concerned that a foreign buyer might not understand the significance of that," she said.

There was speculation that SABMiller might close the Abbotsford site and it was unacceptable for iconic beer brands like VB to be made offshore, she said.

Walsh noted that in May, Foster's had announced it would cut up to 50 jobs at the Abbotsford brewery in Melbourne as part of moves to improve performance at the plant.

The union believed that the job cuts were made to help make Foster's more attractive to a foreign buyer who might want to close the Abbotsford operation, she said.

"I don't think it matters where the head office (of Foster's is)," she said.

"But it does matter to the workers whether or not they'll have a job and they are proud of the tradition that they have."

The chief executive of the Australian Shareholders' Asscociation says many older shareholders want to keep iconic Australian companies under Australian ownership, because they have grown up with them.

"At the same time, they want to get the best price from their assets," head of the ASA Vas Kolesnikoff said.

In the case of the proposed takeover of Foster's, a good price would prevail, he said.

And in the end, the larger shareholders, such as superannuation funds, would determine whether the takeover went ahead.

"They are less ruled by emotion," Kolesnikoff said.

Source: AAP NewsWire

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