42 Below scores Foster's, with maybe more to come

By Deborah Hill Cone

Friday 19th March 2004

Listed vodka marketer 42 Below has signed a major deal with Foster's for the global liquor giant to sell the product to duty-free shops in Asia and Australia.

The contract should provide a significant boost for the fledgling company as up to half the total sales of premium spirits are made through duty-free outlets.

42 Below chairman Grant Baker said Foster's would include 42 Below and South products in its portfolio of brands when it sells to duty-free retailers in Asia, Australia and the Pacific.

Fosters has agreed to sell a minimum number of cases.

Baker would not disclose how many but said the deal was not a loss leader.

"We've been tough on pricing we're definitely not giving it away."

42 Below shares were trading at 43c before the announcement, up from their low of 30c but still out of the money for investors who bought when they listed at 50c in October.

There may be other deals done with Foster's, 42 Below founder Geoff Ross said.

There was potential to work more closely, particularly in Asia, as white spirits were a growth category in that region.

"This is largely a distribution agreement which gives us a whole lot more clout," Ross said.

In a separate move, the company was also expecting to boost sales in the US after changing its importer from Price Imports, which was represented in about 10 states, to Pearl Beverages, the distributor of Corona beer, which has relationships across the US, Ross said.

"We certainly expect it to grow our US sales," Ross said.

42 Below, which has been criticised by naysayers for going to the market too early, is set to release its annual result in May.

Mr Baker said it would make a loss as expected but its figures would be in line with the projections in its prospectus that estimated annual turnover of about $6.7 million.

The company was continuing to promote the product into the world's most chic clubs and bars with LA's power lunch venue The Ivy and West London bar Cherry Jam new signings.

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