By Andrew Starke
The new year has brought little reprieve to Lion Nathan National Foods (LNNF) with the Queensland floods in January compounding a difficult December quarter for the food and beverage company.
While a trading update from owner Kirin Holdings revealed a similar impact to the tough market conditions experienced by most liquor suppliers over the period, several of its beer brands were able to record good growth.
“Rising interest rates and power costs, increased saving and the ongoing economic uncertainty have impacted consumer spending in the fast moving consumer goods and retail sectors in both Australia and New Zealand,” said LNNF CEO Rob Murray.
“Conditions in the December quarter were particularly challenging.
“For LNNF, this flowed into early 2011 where circumstances were compounded by two external shocks, the earthquake in Christchurch and floods in Queensland.”
According to Lion Nathan Australia (LNA), premiumisation and improvements in mix lifted revenue per litre by around 4 percent on the prior December quarter but lower volumes saw revenues slump to $430.2 million, down 11 percent.
Overall market share fell slightly, due mainly to a contraction in the Queensland market with the floods a key contributor. Queensland is LNA’s highest share market.
During the quarter, the Australian beer business also had to conduct a recall on select batches of key brand Boag’s due to a packaging fault.
However the brewer said its master brand portfolio had grown portfolio share, with XXXX Summer Bright Lager delivering the biggest incremental sales growth of any brand in Australia.
Craft beer brand James Squire delivered growth of 23 percent following a marketing push.
Lion Nathan New Zealand (LNNZ) delivered revenues up 9 percent at NZ$ 204.7 million assisted by the first time inclusion of revenue from wine brands acquired from Pernod Ricard, in particular the Lindauer trademark.
“While the quarter saw a decline in beer volumes, particularly on packaged beer, this was broadly in line with the decline in the total beer market,” said a LNNZ spokesperson.
“Despite the sluggish market conditions, revenue per litre growth was encouraging with solid value performances from mainstream brands and volume growth in key premium brands, particularly Steinlager Pure and Corona.”
While wine volumes and revenues fell slightly across the LNNF business, the company pointed out that wine remains a very small part of its business.