DB lifts profit 13pc on beer sales spike

By SIMON HENDERY, liquor writer

A growing beer market combined with savings from its upgraded South Auckland brewery helped boost DB Breweries' profit for the past year by 13 per cent.

The company yesterday reported a $25.4 million net profit for the year to September 30, up from $22.6 million for the previous 12 months.

Group sales rose 10.7 per cent from $287 million to $318 million, although part of the increase was due to DB's buy-back of seven franchised Liquorland retail stores.

Beer sales increased 6.3 per cent.

Managing director Brian Blake said the beer market had grown more than 1 per cent over the past year and three core DB brands - Heineken, Monteith's and Tui - had achieved double-digit sales growth.

A $60 million redevelopment of the company's Waitemata headquarters, completed last year, had resulted in significant cost reductions, mainly from savings associated with the plant's new state-of-the-art packaging lines.

Blake said the Waitemata expansion set up the company for growth, which would be particularly focused on the on-premise market, through investments in brand-themed bars. Over the past year it has opened several "Monteith's" bars designed to offer quality food and beer in an appealing environment.

"We're seeing lots of opportunity with those new concept bars. We believe they are helping grow the market," Blake said.

"In many ways what we're seeing develop is a bit like the English-style pub but with a New Zealand theme to it."

Blake said the Liquorland chain had performed ahead of forecast over the past year, with store numbers up from 70 to 75. Four of the seven stores the company bought back from a franchisee last year had been resold.

DB is 76 per cent owned by Singapore-based Asia Pacific Breweries, which in turn is part-owned by drinks group Fraser & Neave and Dutch brewer Heineken.

Blake said new products would be developed through a mix of local innovation and use of the resources of the group's international parents.

In September it replaced its 2.5 per cent DB Natural Light beer with a Heineken label, Amstel Light.

Hopper, a locally developed fruit-flavoured beer introduced last year, had produced disappointing sales but would continue to appear on supermarket shelves this year, he said.

"That's the commitment to innovation - they won't all be hugely successful and that product didn't go as well as we'd hoped but that certainly won't stop us from continuing to innovate."

A final dividend of 20.5c announced yesterday takes the annual dividend payout to 33.5c, up from 27c last year.