Lion’s craft brands help with mainstream challenges
Lion has announced a 9.5 per cent drop in overall net sales revenue for the first half of the 2017 financial year, to $2.17bn.
The company said the drop was largely due to its distribution deal with AB InBev coming to an end in addition to the sale of Fine Wine Partners. These portfolio changes contributed to a 12.9 per cent in operating earnings, to $334.7m, which the company said its underlying performance remained solid.
Lion CEO Stuart Irvine said: “Lion continued to perform strongly during a period where one-off events significantly affected this result, including the end of our relationship in Australia with AB Inbev, our decision to sell Fine Wine Partners and a global shortage in juice raw materials.
“Sections of the Australian beer market remain challenging. However, our craft offerings continue to post strong growth, helping to offset softness in mainstream beer. We remain focused on strengthening our core brands and growing the category in order to support profit growth in the medium to long-term.”
Within the group’s Australian beer business, the trading update for the first half of the year revealed that while the mainstream beer market is still facing tough conditions, Lion’s craft beer portfolio is helping to offset some of those challenges.
Lion revealed that it has put a renewed focus on the Kirin brand, which has helped the brand to more than triple its volume in Australia. Other key performers for the company included the XXXX Summer Bright Lager, which saw volumes up by more than 10 per cent; Furphy more than quadrupled its volume during the half and James Squire’s One Fifty Lashes continued its strong performance, with growth of 14 per cent.
The termination of the AB InBev deal and the loss of system volume as a result placed upward pressure on the cost of sales, with Lion saying that “against this backdrop, Lion continued its strong cost management focus”.
In New Zealand Lion’s portfolio continued to grow with Panhead Custom Ales seeing volumes up by 76 per cent and Steinlager Tokyo Dry becoming the division’s fastest beer to sell one million litres.