NSW CDS dents half-year profits for Lion
The impact of the NSW CDS and rising energy costs have led to a 9.2% decrease in group operating earnings for Lion in the half year ending June 30, 2018.
Lion’s net sales revenue also decreased by 1.6% to $1,912.5 million, which the company said was "impacted by challenging trading conditions in the mature Australian and New Zealand beer markets and declines in chilled and ambient fruit juice".
However, it said sales in premium categories and brands remained strong, particularly in the growing craft and contemporary beer segments and milk-based beverages.
According to Lion, the impact of the introduction of the NSW Container Deposit Scheme and rising energy costs meant group operating earnings were down to $241.8 million.
Despite the setback, Lion said remains on track to deliver a full-year increase in operating earnings driven by continued improvement in market share, growth in premium categories and cost management.
“On-going weakness in consumer spending, coupled with rising cost inputs, means that we face challenging conditions in both the beer and dairy markets," Lion’s CEO Stuart Irvine said. "However, we continue to make good progress in tapping into the growing high-value segments and adjusting our cost base to reflect market realities.”
Lion Beer Australia gains momentum
Lion Beer Australia saw a recovery from market share challenges during the June quarter, as a consequence of continuing to focus on investing behind its portfolio of brands, particularly in the growing contemporary and craft beer segments.
Originally a Victoria-only brand, Furphy boosted Lion's volumn share of the premium beer segment following a national rollout in February.
Iron Jack Crisp Australian Lager also continued its positive momentum since launching in late 2017, with a 4.5% volume share increase in the contemporary segment and the launch of a new full-strength variant in June "showing promising early signs".
Lion also invested behind the Hahn trademark with the introduction of new packaging and the ‘Now you’re talking’ marketing campaign leading to an increase in Hahn’s share of the contemporary segment.
Lion New Zealand continues to boom
Lion New Zealand maintained its leading market position with strong performances across its beer, wine and non-alcoholic portfolios.
Lion’s craft beer brands outperformed the market with Panhead and Emerson's posting 35% and 25% volume growth respectively, while Mac's continued to grow volume and cement its position as the biggest selling craft beer brand in the country.
Wither Hills and The Ned grew 7% and 13% respectively, making them the fastest growing of the top 10 wine brands in NZ.
Lion New Zealand’s premium non-alcoholic portfolio of brands, The Drinks Collective, also saw strong volume growth, boosted by the re-launch of a lower-sugar version of the 25-year-old Mac's soda range.
In June, Lion opened a new microbrewery, The Fermentist, in Christchurch which focuses on ethical sourcing and sustainable brewing practices. The business was also named a finalist in the ‘wellbeing’ category of the NZ Workplace Health and Safety Awards 2018.
Lion global markets
Lion Global Markets continued to grow its craft beer exports in priority cities in four markets – China, South East Asia, Europe and the US.
The group opened its second owned overseas Little Creatures venue in Singapore, following the opening of a Hong Kong venue in 2016. The Little Creatures brand, now available in 30 cities globally, was also launched in Japan.