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Coca-Cola Amatil has sights on islands

COCA-COLA Amatil has inherited a beer and spirits business in Fiji and Samoa from Foster's that it plans to invest in to unlock the growth potential for the export of local beer and rum to new markets.

John Murphy, Coca-Cola Amatil's managing director of licensed beverages and recently appointed chairman of Foster's Group Pacific, has written to shareholders in the South Pacific beer and spirits company saying the business outlook for 2013 would largely be determined by continued growth in the Fijian economy as well as further recovery in the global economy.

''A main focus for 2013 and beyond will be to unlock the growth potential of the local and export markets for beer and rum via an increased capital-investment program,'' Mr Murphy said in the company's annual report. ''This will provide the essential plant and equipment upgrades needed to improve our business efficiencies and capability to enhance our ability to compete in export markets.''

After last year's $12.3 billion acquisition of Australian brewer Foster's by SABMiller, Coca-Cola Amatil picked up Foster's assets in the South Pacific, a Fiji brewer that also makes and distributes spirits.

Under the deal, Coca-Cola Amatil bought out Foster's 89.6 per cent stake in Foster's Group Pacific for $58 million. The company remains listed on the South Pacific Stock Exchange and has a sprinkling of minority shareholders on its register. It was a good fit as Coca-Cola Amatil also holds the Coca-Cola bottling franchise in Fiji and the company plans to use the smaller brewer as a base to launch its return to brewing in Australia after it serves out a two-year, non-compete clause agreed to with SABMiller.

But in the short term and in need of working capital to increase its infrastructure, the Fiji beer business is struggling. The annual report released this week shows sales revenue for the group rose marginally, from $F72 million to $F74.56 million while net profit slumped by nearly a third, from $F6.9 million to $F4.3 million.

Sales volumes for the 2012 financial year were up 1.5 per cent to 3.352 million nine-litre cases.

Fiji beer sales volumes were up 2.5 per cent to 1.969 million nine-litre cases, but spirits and mixed drinks showed stronger growth, up 9.7 per cent.