Fighting between the two major Australasian brewers is set to worsen, with Foster's plans to make inroads into Lion Nathan's traditional stronghold, New Zealand.

Lion Nathan chairman Doug Myers' family set up the company in New Zealand before expanding across the Tasman, and, with its Steinlager and LN brands, the company is the dominant Kiwi producer.

But from 1 September 2000, Foster's is creating a dedicated unit, which will aim to boost its poor 5% share of the Kiwi beer market.

The group will also up the alcohol content of Foster's from 4% ABV to 4.9% ABV - on a par with Foster's in other parts of the world - to compete with Steinlager.

Until now, New Zealand operations had been run out of Foster's Melbourne headquarters. Vice president Andrew Bonner is being moved from Australia to Auckland to run the new division.

"New Zealand had been run as a branch of Australia but now it will be run as an autonomous country with its own management team and presence in the market place," Bonner told just-drinks.com.

"We sell 100m pints around the world and most of that is at 4.9%. We are a global beer and it makes sense to make New Zealand the same."

But in reality New Zealand is a small, if dedicated, beer market. Foster's cannot expect huge returns from this new operation because there are simply not enough people in New Zealand to support many big brewers.

Analysts believe that Foster's move is motivated by a desire to distract Lion Nathan. Or it could even be good old-fashioned rivalry, with Foster's happy to merely annoy Myers.

Lion and Foster's are slugging it out in the Australian market and many expect them to carry that battle on throughout Asia as they expand their operations.

Whatever Foster's motivation it will have to be very smart to capture a larger part of the Kiwi market without wasting a fortune on marketing.

Dave Robertson