LION NATHAN has outperformed a flat Australian beer market and increased sales in the depressed New Zealand economy, but warns that its wine division will continue to be undermined by the international grape glut and global economic slowdown.
In a trading update for the final quarter of last year, Lion Nathan said its combined alcohol business across Australia and New Zealand posted a 6.6 per cent increase in revenue to $687.4 million.
Its range of beers, which include Tooheys, Hahn and the Queensland beer XXXX, increased revenue by 8 per cent on the back of a 2.9 per cent rise in volume growth in Australia.
The positive performance was in a restrained Australian beer market, in which 6 per cent growth last year has slowed to about 1 per cent this year.
Lion Nathan is closing the gap between it and its arch rival, Foster's Group. Recent industry data has tracked Lion Nathan's share of the beer market rising to 40 per cent from 38 per cent over the past five years. By comparison, the Foster's share has fallen to 49.9 per cent from 55 per cent.
Lion Nathan was bought by the Japanese conglomerate Kirin for $6.5 billion last year and has since been merged with Kirin's dairy concern, National Foods, to form the beer-to-milk business Lion Nathan National Foods. The latest Lion Nathan quarterly result was issued as part of Kirin's earnings report.
The chief executive of Lion Nathan National Foods, Rob Murray, said the group's portfolio of beers continued to increase its market share, kicking off a strong start to the year.
"The investments Lion Nathan has made in its brands, breweries and people have created a strong and agile business," Mr Murray said.
XXXX Gold, the second largest beer in Australia in terms of sales volume, continued its fast growth, while Hahn Super Dry had a particularly good summer, he said.
Some analysts have estimated that nearly half of the 5 per cent market share Foster's has lost since 2005 is due to Lion Nathan acquiring Boags in 2008 and taking distribution away from its competitor.
In New Zealand, the market remained challenging due to its recession. The alcohol sector declined 3.3 per cent in the year to December and the beer market fell 5 per cent in volume terms.
However, Lion Nathan New Zealand outperformed the shrinking market, with its total volume up by 0.4 per cent. It posted revenue growth of 2.3 per cent for the December quarter.
Mr Murray said conditions in the wine industry were challenging due to the global slowdown combined with an oversupply of grapes, which was reducing prices locally and overseas.
The strong Australian dollar had undermined performance in key export markets, he said.
Wine is a small part of Lion Nathan National Foods' business at less than 1 per cent of group profit.
Frequently Asked Questions about this Article…
What were Lion Nathan's latest revenue results and how did the alcohol business perform?
In its trading update for the final quarter, Lion Nathan reported its combined alcohol business across Australia and New Zealand delivered a 6.6% increase in revenue to $687.4 million, showing solid top-line growth for the period.
Which Lion Nathan beer brands drove growth and what were the volume and revenue changes?
Lion Nathan's beer portfolio — including Tooheys, Hahn and Queensland beer XXXX — helped drive an 8% increase in beer revenue, supported by a 2.9% rise in volume growth in Australia. XXXX Gold continued fast growth and Hahn Super Dry performed particularly well over summer.
How has Lion Nathan's market share changed compared with Foster's Group?
Industry data shows Lion Nathan's share of the Australian beer market rose to 40% from 38% over the past five years, while Foster's share fell to 49.9% from 55%. Analysts attribute much of Foster's lost share to Lion Nathan's moves such as acquiring Boags in 2008 and taking distribution away from competitors.
How did Lion Nathan perform in the depressed New Zealand market?
Despite a New Zealand recession where the alcohol sector fell 3.3% year to December and the beer market dropped 5% by volume, Lion Nathan New Zealand outperformed the market: total volume was up 0.4% and it posted 2.3% revenue growth for the December quarter.
What was the impact of Kirin's acquisition and the merger with National Foods on Lion Nathan?
Kirin bought Lion Nathan for $6.5 billion last year and merged it with Kirin's dairy unit, National Foods, to form Lion Nathan National Foods — a combined beer-to-milk business. Lion Nathan's latest quarterly result was issued as part of Kirin's broader earnings report.
Why is Lion Nathan's wine division under pressure and how significant is it to the group?
Lion Nathan says its wine division is being undermined by an international grape glut and a global economic slowdown, which are reducing prices locally and overseas. A strong Australian dollar has also hurt export performance. Wine is a very small part of the group, accounting for less than 1% of group profit.
What broader Australian beer market trends should everyday investors note?
Investors should note the Australian beer market has slowed from about 6% growth last year to roughly 1% this year, making Lion Nathan's outperformance — growing revenue and volume while gaining share — a notable development in a restrained market.
What strategic actions has Lion Nathan taken to grow market share?
Lion Nathan credits investments in brands, breweries and people for creating a stronger, more agile business. Strategic moves such as acquiring Boags and changing distribution have also been cited by analysts as factors helping lift Lion Nathan's market share.
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