It would be very easy to use the line, “Lion Roars in First Half”.…so we will.
Kirin has just released its trading results for the first half ending 31 March which show the brewer’s local operation is swimming against the tide a little, posting a volume increase of 3.4 per cent with the figures not including its acquisition of Corona and Stella. This contrasts with SABMiller releasing CUB’s figures last week which showed a first quarter volume decline (the companies report to a different timetable) of 8 per cent to the end of June.
As we have said before, we’re not financial whizzes here at Australian Brews News, so we will leave it to the experts at the major financial houses to analyse the figures (though these are the same people who brought you the GFC, so maybe we should have a crack at it…). However, it is pleasing to see that the Lion craft beer range — and let’s not start that what is craft beer argument again — posted volume and value growth over 50 per cent. These figures relate to the period before the current major advertising campaign for the James Squire brand, arguably the first major campaign for a craft brand. It will be interesting to see what comes of that.
Anyway, here’s the figures.…
Lion H1 Trading Update
3 August 2012: Lion today announced its trading update for the half ended 31 March 2012 in conjunction with Kirin Holdings’ half year announcement.
Lion CEO Rob Murray said: “Like all businesses in the retail and consumer goods markets we are dealing with some very cautious consumers, who are saving up to five times the historical average and entertaining more at home.
“A highly competitive retail market and deep discounting on select private label products is squeezing margins for branded players as volume shifts from branded to private label products and from the higher-margin non-grocery channel to grocery.
“In this environment Lion’s clear, long-term strategy of investing in its people, high-potential brands and manufacturing assets is more critical than ever. The only Australian manufacturers who will survive and thrive in the emerging marketplace will be those who innovate and differentiate their brands and who take tough decisions to deliver production, manufacturing and distribution efficiency.”
Despite the declining beer market, Lion’s Australian beer business delivered a standout performance during the half, continuing its positive momentum and emerging as Australia’s largest brewer.
“Our pre-existing portfolio grew volume and value share in a declining market as a consequence of Lion’s focussed long-term investment in marketing and innovation. The rise of our market-leading mid-strength beer XXXX GOLD to the number one beer brand in the country is evidence of this – and not only a positive commercial development but also a positive shift in our drinking culture more broadly,” continued Rob.
“The outlook for our Australian beer business is positive, with a number of international brand owners choosing to partner with Lion in this market, and our proposed acquisition of Little World Beverages presenting a further growth opportunity in the flourishing craft market.”
Beer, Spirits & Wine
Lion’s Beer, Spirits & Wine divisions in Australia and New Zealand increased revenues 1.7 percent to $1,197.8 million and delivered operating earnings before interest and tax (EBIT) of $337.3 million, an increase of 9.2 percent.
Lion’s Beer, Spirits & Wine division in Australia saw volumes increase 3.4 percent, leading to a 4 percent revenue increase to $929.1 million.
Lion saw volume share growth in every state off the back of strong performances from its core trademarks. XXXX GOLD grew volume and value share off a large base, as did Lion’s strong suite of contemporary brands Hahn Super Dry, Tooheys Extra Dry and XXXX Summer Bright Lager1 . Lion’s James Squires trademark continued to drive growth in the craft market, posting volume and value growth over 50 percent2 .
During the half Lion announced the addition of Corona Extra to its international premium portfolio, however Lion’s first shipments were not received until April and are therefore not included in the H1 result. Since the conclusion of the half Lion has also welcomed Stella Artois and Belgian specialities Leffe, Hoegaarden and Belle-Vue Kriek to its portfolio, and from November will add Guinness and Kilkenny – rounding out its international premium portfolio to six of the top 10 brands in the market.
Lion’s Beer, Spirits & Wine division in New Zealand saw volumes decrease 3.7 percent, leading to a 7.2 percent revenue decrease to NZ$350.1 million.
The decline was driven by falling beer volumes as a result of the overall market contraction and a highly competitive market, and exacerbated by a poor summer season.
Despite these challenges the Mac’s craft range maintained its strong pace of growth supported by pack extensions, and Beck’s enjoyed substantial growth off the back of broad-based sales and marketing activity. New product launches in cider strengthened Lion’s leadership of the category, while its successful spirits marketing platform, The Mix, continues to add incremental spirits volume. In wine, strong volume and revenue growth were fuelled by Lindauer, Corbans, and Saints brands acquired in November 2010, together with continued strong performance of Wither Hills.