Melbourne, Nov 21 - The invasion of Australia's drinks industry has only just begun, as foreign suitors armed with cash and stronger currencies look to smash down the door to one of the world's most profitable markets.
The tumbling Australian dollar and some strategic blunders have already weakened the local industry's defences, analysts say, pointing to moves this week by U.S.-listed Molson Coors Brewing Co and Japan's Kirin Holdings Co Ltd
"This is certainly not the end game," said Theo Maas, partner at Fortis Investment Partners.
"I certainly don't think the Australian beverage landscape is going to look the same in 12 months' time."
In the past two weeks, Molson revealed it had a 5 percent interest in Australia's largest brewer, Foster's Group, and Kirin's Australian affiliate, Lion Nathan, made a A$7.6 billion for soft-drink bottler Coca-Cola Amatil owned about 30 percent by U.S.-based Coca-Cola Co
Australia's beer market has long operated as a duopoly between Foster's and Lion Nathan while Coca-Cola Amatil has dominated soft drinks. But this looks likely to change as Australia's small, high-margin market attracts foreign envy.
Japanese brewers seeking growth outside a shrinking home market are expected to be among those that reshape the sector, while international brewers Molson, SABMiller Plc and Heineken are also expected to be interested.
Kirin, which holds 46 percent of Lion Nathan, is not only backing the hostile bid for Coca-Cola Amatil. It has also just completed its entry into the milk market, buying Australia's top milk manufacturer, Dairy Farmers.
Coca-Cola Amatil has spurned the offer, but Kirin may not be easily repelled from Australia. It says it will look for other deals if Coca-Cola Amatil shareholders reject Lion Nathan's bid.
Unlisted Japanese food and beverage maker Suntory, which bought Danone's Australia and New Zealand Frucor fruit juice unit last month, has also said it is ready to spend another 200 billion yen ($2.1 billion) for acquisitions at home and overseas.
"Unlike Japan, other Asia and Oceania markets are growing. It would be a boost if a Japanese beer-maker can have a business base in Australia," said Tokushi Yamasaki, food and beverage sector analyst at Daiwa Institute of Research in Tokyo.
He added the strong yen was a useful weapon. The Australian dollar has tumbled 40 percent against the yen this year.
"A stronger yen has made acquisitions cheaper. For Japanese food companies, its a chance," he said.
Suntory and Asahi Breweries Ltd have been mentioned by Australian analysts as likely bidders for the Australian Schweppes drinks unit of Cadbury Plc, which holds around a quarter of the Australian soft drinks market.
There has also been talk Asahi's interest may go further.
Asahi denied an recent, unsourced newspaper report that it had hired Nomura to do a study for it on the Australian beer and alcoholic drinks market, but declined to comment on whether it had hired anyone else to do such a study.
The fate of Foster's is also under a cloud. It has put its troubled wine unit under review in the hope of keeping its main brewing business, Australia's largest, but the review has exposed Foster's vulnerability and the beer business itself appears to be as much in the cross-hairs of predators as the wine unit.
Molson's 5 percent interest in Foster's, maker of Victoria Bitter, is seen as a means to reserve a seat at the bar if the beer division is hived off.
"They have been pretty clear that they are not interested in the wine business," said a source familiar with Molson Coors' thinking. The source added the deal gave Molson a position, to build on if it wanted, at an attractive price.
Investors doubt Molson can mount an acquisition of Foster's beer by itself. With a likely price tag of over A$10 billion, Foster's beer business is worth about as much as Molson itself.
"It would be a brave move," said Daniel Nelson, associate investment analyst at Constellation Capital Management.
SABMiller Plc is also mentioned as a possible buyer of Foster's beer unit, perhaps in collaboration with its U.S. joint venture partner Molson. Investors also mentioned Dutch brewer Heineken as a possible contender.