Market research
- FY operating profits fall 4.3% to AUD668m (US$522m)
- Net sales in 2014 slip 3.1%
- Alcohol beverage volumes down 2.7%
- Dairy/soft drinks volumes fall 7.3%
Lion has seen a slip in full-year sales and profits as its alcohol business felt the on-going impact of falling consumption in Australia.
Lion has suffered from falling alcohol consumption levels in Australia
The Australasian drinks and food unit of Japan's Kirin Group said sales in the 12 months to the end of September fell by 3.1% to AUD5bn (US$3.9bn). Operating profits slipped by 4.3% to AUD668m. Lion pointed to a year of "subdued consumer sentiment fuelled by highly competitive and deflationary market conditions”.
In the group's alcohol unit – covering beer, wine and spirits – volumes across Australia and New Zealand fell 2.7%. “Australian and New Zealand consumers are drinking less alcohol overall than any time in the previous 15 years," said Lion CEO Stuart Irvine. “However, this is positively coupled with a trend towards premiumisation, as consumers ... trade up to higher equity brands.”
Among the bright spot were Lion's “craft” beer brand, James Squire, which saw volumes leap 23%. The company's two biggest beer brands - Speight’s and Steinlager Classic - also grew volumes, by 3% and 4% respectively.
In New Zealand, the company said its wine portfolio was boosted by “innovation and brand investment”, without giving further detail.
At Lion's Dairy & Drinks (LDD) unit, full-year volumes declined by 7.3%. The company said “challenging” market conditions were exacerbated by “historically-high global milk prices that impacted returns across the dairy sector”. However, Lion flagged that it has started a three-year “turnaround” strategy which involves focussing on its most profitable segments.
“Our portfolio of natural dairy and juice products is highly aligned to Australians’ increasing desire for better quality and less processed food, and their preparedness to pay more for quality, provenance and nutritional benefits, and this renewed focus on nutrition and ‘better-for-you’ foods will be a core driver of growth in future years,” added Irvine.
For just-drinks' coverage of Kirin's full-year performance, click here.
For Lion's full results statement, click here.
Sectors: Beer & cider, Company results, Spirits, Wine
Companies: Kirin Brewery Co.
