Paul McIntyre: Spoof beer advert a blockbuster tonic

The beer wars are back.

Lion Nathan has felt the heat this year in the Australian beer market as brewing arch-rival Foster's engineers an astonishing turnaround for Carlton Draught, a brand that until two years ago was almost dead.

Such is the concern in the Lion Nathan camp about its flagship Outgoes New brand losing momentum to Carlton Draught that the brewer is now working on a blockbuster TV ad with a production budget of up to A$2 million ($2.14 million) to counter its rival.

It's rare for advertising campaigns to be given the kudos for being a major influence on business results, but the tearaway success of a Carlton Draught's "Big Ad" - which was shot in New Zealand earlier this year - is receiving accolades from around the world and moving truckloads of extra beer.

Blokes are back in a big way buying Carlton Draught while Toohey's New is in slow decline.

So popular is the spoof campaign, which features digitally manipulated armies running at each other in an Otago valley to form a giant glass of beer, that Foster's had to reduce the amount of airtime it had booked for it.

The commercial has been downloaded more than 3 million times from an officially endorsed website. Foster's is now crowing of a 30 per cent increase in volume sales this year for Carlton Draught.

Such has been the turnaround for the once lowly-ranked brand that Lion Nathan has briefed its ad agency in Sydney, Saatchi & Saatchi, to come up with something that will bury Carlton's momentum and deliver some good news to its management - Lion Nathan reports its full-year results in two weeks.

It's not all good news in the Foster's beer portfolio, however. Victoria Bitter is being hit by Carlton Draught's success although insiders says Foster's beer unit, Carlton United Beverages, had planned two years ago for the ongoing cannibalisation of VB.

And while the two brewing giants slug it out in their branded beer battle, Australia's two supermarket retailers continue their own street fight in the push for consolidation in the A$11 billion retail liquor market.

Woolworths this week paid A$380 million to buy a chain of 33 pubs across New South Wales, Victoria and South Australia, known as the Taverner Hotel Group, and Woolies chief, Roger Corbett, was not afraid to use the deal to muscle up on his rival, Coles Myer boss John Fletcher.

"We have meant business here for some time," Corbett said this week.

"Our competitors are aware of our commitment to build an Australia-wide chain of liquor stores."

Last year Woolworths outbid Coles in a A$1.3 billion takeover of Australian Leisure and Hospitality (ALH), bolstering Woolworths national share in retail liquor to about 30 per cent. The ALH acquisition contributed significantly to Woolworths announcing in August a 15 per cent increase in net profit to A$790.5 million for the 12 months to June.

The latest deal will now turn Woolworths into one of the largest poker machine operators in Australia, although the Taverner sites do not offer as much potential as those in the ALH deal.

ALH sites with large car parks offered Woolworths the ability to redevelop them into big-barn liquor style outlets.

And it's clear that since taking over at Coles Myer, John Fletcher has attempted to match Woolworths in widening Coles' supermarket offer - first with an expansion into petrol retailing and associated discounts when shoppers frequent both retail chains and now with Coles pushing further into liquor, which is also linked to the grocery format.

Certainly Fletcher spooked Corbett for a while with the Coles Myer fuel initiative with Shell outlets, but Corbett is now doing his best to rub in a little salt over the liquor stoush.

Shaw Stockbroking analyst Scott Marshall said the latest acquisition from Woolworths removed some growth opportunities for Coles in the liquor trade.

"It has more of a strategic value for Woolworths," he said. Now it's John Fletcher's turn to punch.

* Paul McIntyre is a Sydney journalist