Bega buys up Lion’s Dairy & Drinks business

Kirin Holdings and Lion have announced an agreement to sell the Dairy & Drinks business to Bega Cheese for A $560 million. The sale is unconditional, including no further regulatory approvals required and is expected to be completed in early 2021.

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Mengniu Dairy opt out of Lion deal

Beverage giant Lion and China-based Mengniu Dairy have agreed to part ways on the $600 million deal that was supposed to have the Chinese company take over brands such as Pura milk, Dare iced coffee and Yoplait yoghurt.

The sale was abandoned after federal treasurer Josh Frydenberg made it clear that the Foreign Review Board was unlikely to approve of the sale. “contrary to the national interest”.

The sale was announced last November, but soon caught the eye of government regulators, who Frydenberg said and found that the sale was contrary to national interests.

It comes on the back of several similar issues including China imposing tariffs on Australian barley, and starting an investigation of alleged dumping cheap Australian wine onto the Chinese market.

Lion realeased a statement stating the deal was no longer viable.

“Lion notes that China Mengniu Dairy Company Limited has been awaiting the outcome of the Foreign Investment Review Board review of its proposed purchase of Lion Dairy & Drinks,” the statement said.

“Given this approval is unlikely to be forthcoming at this time, Lion and Mengniu Dairy have mutually agreed to cease the current sale process.

“We are disappointed with this outcome and will now consider pathways forward in relation to the Lion Dairy & Drinks business.”

Lion breweries victim of cyber attack

Over the past week, Lion has continued to make progress in restoring many of its key systems following a cyber attack that caused a partial IT outage. The attack, which occurred on 12 June, was the result of ransomware targeting the company’s computer systems. In response, Lion  shut down key systems as a precaution.

In terms of  operations, the company has  managed to get all its breweries back up and running. It is now brewing, kegging, packaging and distributing beer at its nine major breweries across Australia and New Zealand.

All Lion’s dairy and juice sites are operational; and across many parts of the business customers are once again able to place orders and view their invoices online. Lion is working to get all of its customer ordering platforms operational as soon as possible.

Despite this progress, the company still expects to see some further disruptions as it continues to restore systems. Lion will continue to work with its team of experts to complete this work as quickly as possible, minimising any further disruptions, including to supply.

The timing of this attack – just as the hospitality industry is trying to get back on its feet post COVID-19 closures – could not have been more challenging for Lion and its industry partners.

To date, Lion does not have evidence of any data being removed. It remains a real possibility that data held on the company’s systems may be disclosed in the future.

The company’s cyber help line remains open 24 hours, 7 days a week, and it encourages any Lion stakeholders that may have questions or concerns about the cyber attack to use this service.

ACCC okays Chinese dairy acquisition

The Australian Competition & Consumer Commission (ACCC) has given the nod to China Mengniu Dairy Company Ltd (Mengniu) for the proposed acquisition of Lion Dairy & Drinks Pty Ltd (Lion D&D).

“Mengniu Dairy was already looking for opportunities to diversify its business and expand its brand presence in the emerging markets. The transaction will allow Mengniu to enhance its presence in the Australian market and strengthen its portfolio by leveraging Lion’s longstanding brand presence and manufacturing and cold chain distribution hold across Australia. The transaction will strengthen Mengniu with a stronger foundation to excel in the Asia-Pacific (APAC) region,” said Shagun Sachdeva, consumer insights analyst at GlobalData, a  data and analytics company.

Mengniu has recently completed the $2.2bn takeover of infant formula company Bellamy’s Australia, in line with its aggressive acquisition strategy. The series of acquisitions will create greater synergies for the group not only from the geographical footprint point of view but also from the supply chain perspective as well.

At the same time, Lion has been trying to sell its dairy portfolio since 2018, which comprises of Big M, Pura, Dairy Farmers, Berri and Daily Juice brands. In October last year, Lion sold its specialty cheese business to Saputo Dairy Australia, with plans to focus on high-margin alcoholic beverage and premium non-alcoholic drinks in Australia and New Zealand.

“According to Global Data, the APAC dairy and soy food sector is forecast to grow from $194bn in 2018 to $254bn in 2023, registering a compound annual growth rate (CAGR) of 5.5 per cent,” said Sachdeva. “Milk was the largest category in the APAC dairy and soy food sector, followed by drinkable yogurt and cheese. The Australian dairy and soy food sector is expected to reach from $12.1bn in 2018 $14.8bn in 2023.

“The news of getting a green signal from ACCC comes at an extremely delicate time when China is going through tough times because of coronavirus and hence, it will be interesting to see how the deal will pan out in the future.”

Boag’s Brewery sheds Launceston about third of workforce as brands move interstate

The shedding of 39 jobs at Launceston's Boag's Brewery has come as a shock, the United Voice union says.

Parent company Lion said it was making the changes to improve efficiency in its brewing network.

The Boag's brands will still be fully brewed in Launceston but various national brands will move interstate.

According to Company spokeswoman Leela Gantman, the market had faced a challenging time and added brewing costs in Tasmania had also been a factor.

"We've done this off the back of some very challenging years in the beer market and the need to ensure our operations both nationally and in Tasmania are sustainable," Gantman said.

"Certainly the rate of decline of beer production has been sharper than originally anticipated, so this has put our entire brewery network under pressure."

United Voice secretary Jannette Armstrong said the decision came as a surprise and was "devastating".

"This is going to have a massive impact, particularly [in] Launceston which is already feeling the hurt of unemployment," she said.

"It is very difficult to find a job at the moment, especially in the Launceston area, so it will be a very, very distressing time for those workers and for their families.

"Last year they laid off a whole heap of casuals and they have been talking about the reduced beer market across Australia, but in terms of any indication they were going to be cutting more jobs [that] was an absolute shock and we're disappointed there wasn't more notice and greater consultation."