Lion benefits as New Zealanders drink more beer

By SIMON HENDERY liquor writer

Brewer and vintner Lion Nathan boosted its New Zealand earnings by 7.4 per cent in the past half year thanks in part to last year's increase in per-capita beer consumption - the first in 25 years.

Sydney-based Lion yesterday posted a 10.3 per cent jump in its net profit for the half year to March 31, to A$110.3 million ($124.3 million).

The New Zealand side of the business contributed A$51.7 million to a group operating profit of A$231.9 million.

The head of the company's New Zealand brewing business, Julian Davidson, said it had pumped money from cost savings back into its marketing efforts, which was helping to drive market growth.

In three years the company had increased spending on marketing by 35 per cent, he said.

Strong competition was credited for a 21 per cent year-on-year increase in supermarket sales, which now account for 25 per cent of the company's New Zealand sales.

Premium brands, now making up about 20 per cent of sales, continue to be the industry's big growth story. Although sales of some cheaper mainstream Lion brands were falling, sales of the premium Mac's label was up 26 per cent, and Stella Artois sales rose 37 per cent.

Lion chief executive Gordon Cairns said the company was on track to meet its full-year profit expectation of A$180 million ($204.63 million), 11 per cent up on last year.

However, that depended on how the Sars virus affected the company's fledgling Chinese operations.

Cairns said that, although the company's core Australian business had been "slightly disappointing", China beer operations were on track to break even at an operating profit level during the current fiscal year after strong growth in the first half.