Even in the beer-loving country of Australia, an iconic brand is feeling the recession's sqeeze.
Foster's Group, the most profitable independent brewer in the world, reported a net loss of $93 million on Tuesday, according to Bloomberg. That same day, CEO John Pollaers told CNBC's Squawk Box that while the company's domestic sales may be lagging, he expects it to be only momentary.
"The Australian beer market is going through a period of uncertainty driven by the economic uncertainty that middle Australia is feeling," Pollaers told CNBC. "But it's certainly a short term circumstance and we will recover from this."
Foster's recently rejected a $10 billion hostile takeover bid from SABMiller, saying the offer was undervalued, according to Bloomberg. Instead, in an effort to please investors, it now plans to buy back $525 million in stock. Since 2005, Foster's Australian market share has declined to below 50 percent, from 55 percent, but the company largely blames recent poor performance on natural disasters as well as consumer preference for craft brews and pre-mixed spirit drinks.
While Pollaers says he believes that "a turnaround of the business is on track," recession trends in alcohol sales can be difficult to predict. Hard times can lead some consumers to drink more and others to become more frugal. In the United States, for example, alcohol sales have increased 10 percent over the year ending in May, CNN Money reports. Yet it's far from a hard and fast rule. In 2009, at the height of the recession, sales only increased by 1 percent. Other mass-produced beers like Budweiser continue to struggle, with sales reportedly dropping 7.3 percent in 2010. As in Australia, craft beers have seen sales rise.
Watch the interview on CNBC here:
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