Lion Nathan has announced annual earnings of $151.8m, due largely to a 14% jump in its beer businesses. While Lion's beer business is doing well at the moment, general beer sales in the Australian-based company's core markets are not growing fast. As a result, Lion is spending heavily on acquisitions in the faster-growing wine market. With such future planning, and favourable market conditions, its positive expectations for next year look attainable.

Despite strong growth in its beer business, Lion Nathan is still determined to move into wine production. For the 12 months to September 30, earnings from beer increased by 14%, contributing $141.5 million to the annual total, representing over 90% of the company's full year earnings of $151.8m.

But, as the market is showing, it's not been easy for the Australian-based company - 46% owned by Japan's Kirin Brewery - to continue growing its business. It needs more strings to its bow.

The company is worried about drinking trends in Australia, New Zealand and China. The common trend running through these markets is the growth of wine sales, while beer remains static.

Lion Nathan sold its 63% share of New Zealand-based winemaker Montana earlier this year after losing a takeover battle with Allied Domecq. In Its place, Lion Nathan has made offers for two smaller winemakers. It bid $35m for Banksia in Australia, and $118 million for Petaluma. It may be bidding rather highly, but the company is determined to make the contribution that wine adds to its bottom line a significant one.

While its attempts to sell its Chinese beer division were shelved earlier this year, Lion Nathan isn't the only brewing company that has been having problems in that market, and the situation in China is looking rather more optimistic than this time last year. Losses were down 32% to $9.8 million, thanks to drastic cost cutting measures and higher sales. On the plus side, several of Lion's rivals have closed their operations in that country, leaving the market easier for it to operate in.

Lion Nathan is confident that its growth trend will continue, predicting another year of double-digit growth ahead. The company may well be right. To ensure that it isn't left behind its rivals, it is planning ahead as consumer preferences change. And, while its Chinese operations look set to remain a burden for the foreseeable future, at least things are starting to look a bit more positive.

(c) 2001 Datamonitor. All rights reserved. Republication or redistribution, including by framing or similar means, is expressly prohibited without prior written consent. Datamonitor shall not be liable for errors or delays in the content, or for any actions taken in reliance thereon.