Lion Nathan hits the spot as Foster's flattens

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.