By Andrew Starke

Lion, formerly Lion Nathan, has released a trading update for the half ended March 31, 2011, in conjunction with parent company Kirin Holdings, revealing an alarming slump in liquor sales.

The company saw revenue declines across its Australian businesses driven by poor weather, weak consumer demand, natural disasters and deep retailer discounting on white milk and equally challenging circumstances in New Zealand.

Lion’s beer, spirits and wine divisions in Australia and New Zealand delivered operating earnings before interest and tax (EBIT) of $308.9 million, a decrease of 10.8 percent. For the period, revenue declined 6.3 percent to $1.178 billion.

Lion’s beer, spirits and wine division in Australia saw volumes reduce 10.3 percent leading to an 8.3 percent revenue decline to $824.2 million.

However, Lion CEO Rob Murray said the company’s beer brands were starting to recover.

“Since the end of the half, Lion’s Australian beer business has recovered market share, returning to its long term trend,” he said.

Having grown volume share each year since 2006, Lion saw some contraction in the half due to significant pricing activity on key competitor brands.

The company estimates the contraction of the Queensland market, driven by the impact of the floods, reduced Lion’s share of the national market during the half by approximately 0.5 of a share point.

The business also conducted a recall in the lead up to Christmas 2010 on select batches of key brand Boag’s due to a bottle design fault.

New innovations XXXX Summer Bright Lager, Hahn Super Dry 3.5, Tooheys Extra Dry 5 Seeds and craft beer trademark James Squire continued to record growth.

Lion said the wine industry remained challenging, with the strong Australian dollar continuing to undermine returns from key export markets and an oversupply of grapes maintaining downward pressure on pricing in domestic and international markets.

”Despite this, wine saw only moderate volume and revenue declines in the half,” said Murray.

”Wine is a very small part of Lion and the Australian business remains focussed on executing its targeted premium wine strategy.”

The former Lion Nathan Australia and Lion Nathan Wine divisions are now referred to as Lion – Beer, Spirits & Wine Australia.

The former Lion Nathan New Zealand becomes Lion – Beer, Spirits & Wine New Zealand and the former National Foods Business will be referred to as Lion – Dairy & Drinks.

In most cases the company will simply be known as Lion unless a distinction needs to be made between business units.

”Business integration is progressing to plan, with the business uniting under one trading name, Lion, since the conclusion of the half,” said the company in a statement.

Lion’s beer, spirits and wine division in New Zealand is recovering from the Christchurch earthquake, with the business announcing a $43 million investment across three sites in New Zealand to compensate for lost production at its damaged Canterbury Brewery, located in the Christchurch.


The Shout Team

The leading online news service for Australia's beer, wine, spirits and hospitality industries.

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