Colin Kruger
November 5, 2012
The Age
AUSTRALIA’S dairy industry has not been a happy hunting ground for Lion – the local subsidiary of Japanese conglomerate Kirin – but beer is starting to provide a better story for the business formerly known as Lion Nathan which overtook Foster’s this year as Australia’s largest brewer.
According to AC Nielsen data, Lion now has Australia’s top-selling beer in XXXX Gold with 12.4 per cent of the market by volume compared to VB’s 12.1 per cent.
Lion leads the overall market with 47.5 per cent to Foster’s 44 per cent.
More importantly, recent contract wins ensures Lion is not expected to lose its crown any time soon.
In the June quarter, Lion signed up Corona and Stella Artois from AB InBev.
It completed the acquisition of the brewer behind Little Creatures in October, and then added Diageo’s Guinness and Kilkenny to its brand portfolio this month.
And while Coca-Cola Amatil has talked up the prospects of it poaching some of these brands when a non-compete clause for the Australian beer market expires late next year, Lion’s head of marketing for beer, wine and spirits, Matt Tapper, said it won’t be easy.
”These international partners, don’t move brands around without thinking long and hard about it,” he said.
”We’ve got a very strong relationship with those businesses.”
While craft beers and international premium brews will help drive higher margin revenue growth for Lion, XXXX Gold remains the main focus.
”That is our number one priority in the portfolio. That’s our biggest brand and its continuing to grow, and that still has significant opportunity across Australia,” Mr Tapper said.
XXXX Gold dominates Queensland, country NSW and Victoria, Mr Tapper said but it has ”got a lot of headroom in terms if establishing itself in every corner of Australia. So that’s a big focus for us in that part of the market.”
On Friday, Lion reported that its dairy business is continuing to suffer from the fallout from Coles and Woolworth’s milk wars.
Sales volumes for its dairy and drinks business is down 13.3 per cent, and revenue is down 10 per cent to $1,918 million for the nine months to June 30.
The big problem continues to be milk which was down 14 per cent in volume terms thanks to private label contract losses and reduced sales of its branded milk.
The company said that the deep discounting is ”likely to continue for the forseeable future”.
Its beer business reported year-to-date volume increases of 1.3 per cent in a market that declined 5.1 per cent according to AC Nielsen.
Lion said its brewing revenue increased of 3.9 per cent to $1,338.4 million partly reflecting its addition of Corona Extra and Stella Artois brands in the June quarter.
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