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Bloomberg Business Week: SABMiller Sends VB Beer the Way of New Coke With Change

September 6, 2012


From Bloomberg Business Week:

SABMiller Plc. (SAB), the world’s second- largest brewer, will send its Victoria Bitter beer the way of New Coke, discarding a recipe change that saw VB overtaken as Australia’s top seller by Kirin Holdings Co. (2503)’s XXXX Gold.

Carlton & United Breweries, the Australian beer business SABMiller acquired with its takeover of Foster’s Group Ltd. last year, will revert to a formula abandoned in 2007 and raise the alcohol content from 4.6 percent to 4.9 percent from October this year, the London-based company said in a statement on its website. The beermaker today placed full-page advertisements in the Herald Sun, Australia’s top selling daily newspaper, saying “we got it wrong.”

The reversal echoes the experience of Coca-Cola Co. (KO)’s New Coke, said John Roberts, a professor of marketing at Australian National University and London Business School. New Coke attracted so many protests when it replaced Coca-Cola’s classic formula in 1985 that the original product was reintroduced three months later.

“You can do almost anything you want with the taste, but in beverages you don’t mess with the brand image,” Roberts said by phone. “People are doing more than drinking beer, they’re drinking the whole story.”

Excise Tax

Kirin’s shares rose 2.2 percent to close at 988 yen in Tokyo today, the biggest gain since Aug. 7, while the broader Nikkei 225 index fell 1.1 percent. SABMiller fell 0.3 percent at 9:11 a.m in London as the FTSE 100 index slid 0.5 percent.

Recipe changes to century-old VB, as it’s known to locals, dropped its strength in 2007 and again in 2009 to save on an excise tax levied on alcohol content, Carlton & United spokeswoman Jennifer Howard said by phone from Melbourne. The company also introduced new packaging and new variants of the brew to arrest a slipping market share.

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To read more visit Bloomberg Business Week.


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