Lion reports increased alcohol sales but a decline in dairy

Japanese-owned Australian food and beverage manufacturer Lion has released a quarterly trading update which reports a 14 percent increase in beer, wine and spirit sales in face of an overall lag in the category’s market.

The increase has been credited towards the company’s acquisition of international premium and craft brands, as well as consistent performance from the manufacturers’ existing portfolio AFN reported.

Premium brand Corona Extra experienced its strongest performance to date by gaining a share point, and craft brands James Squire and Little Creatures both grew ahead of the category and increased volume share.

Staple brand XXXX Gold held its position as the largest beer brand in the country and contemporary brands, Hahn Super Dry and XXXX Summer Bright Larger both grew in volume and share throughout the period.

As well as impressive growth in volume, the category also enjoyed a 26.3 percent increase in revenue to $634.9 M.

Recent changes to supermarket giant Coles’ private label supply contracts however have contributed to the challenges that the dairy and drinks category faced during the quarter.

Lion CEO, Stuart Irvine said contract changes can cause significant disruptions to farmers and processors.

“Previous experience demonstrates that changes in these contracts can cause significant disruption for farmers, and we are still in the process of assessing the impact on our business and the most appropriate way forward,” he said.

Lion said that the dairy and drink category remained highly competitive in core categories such as milk, juice and cheese during the quarter due to strategic discounting, product rationalization and increased participation in retailer-owned brands.

Lion also said they exited some unprofitable contract volume, particularly in the convenience channel.

Despite overall revenue for the dairy and drink category experiencing a decline of 6 percent ($631.8M), Lion reported that its dairy beverage brand Dare, and its share of yoghurt driven by the Yoplait brand, grew in volume.


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