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Return to basics puts froth into DB Breweries

Thursday 17th April 2003

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DB Breweries' comeback from the ranks of the walking dead is a classic tale of a meandering multi-faceted New Zealand company getting back to its core business.

The turnaround in the company's fortunes stems from a strategic review carried out in 1999 and announced in October that year.

In quick order DB closed the Allied Liquor Merchants distribution business, established the Liquorland chain as a standalone franchise, shut down its corporate head office and split itself into autonomous wine and beer divisions.

Majority shareholder Asia Pacific Breweries, a joint venture between Dutch brewing giant Heineken and Singapore's Fraser & Neave, showed its faith in the new direction in early 2000 with a largely unsuccessful mop-up bid.

In September that year DB sold Corbans Wines to Montana for $151 million, which it immediately returned to shareholders via a share cancellation. That December it announced the $60 million final phase of its Waitemata site redevelopment, a project completed last November.

At the annual meeting in February it predicted the investment would yield a significant earnings lift.

In the meantime the beer brands have been repositioned with large-scale investment in advertising and marketing. Last year saw the first overall beer market growth for 10 years.

Capital expenditure needs are now modest and DB has signalled a lift in the 67% dividend payout rate.

But managing director Brian Blake says the company still has some way to go before it reaches full potential.

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