A good head of profit for Lion Nathan

BREWER Lion Nathan has outperformed a flat Australian beer market and has increased sales in the depressed New Zealand economy, but has warned its wine division would continue to be undermined by the international grape glut and global slowdown.

Releasing a trading update for the final quarter of 2009, Lion Nathan said its combined alcohol business across Australia and New Zealand posted a 6.6 per cent rise in revenue to $687.4 million.

Its range of beers, which include Tooheys, Hahn and Queensland-based XXXX, increased revenue by 8 per cent on the back of a 2.9 per cent rise in volume growth in Australia.

The positive performance on this side of the Tasman was in the midst of a restrained Australian beer market that has witnessed 6 per cent growth in 2009 slow to about 1 per cent this year.

It also comes as Lion Nathan closes the gap between it and arch rival Foster's Group. Recent industry data has tracked Lion Nathan's share of the beer market rising to 40 per cent, up from 38 per cent ago five years. Over the same period, Foster's share has fallen to 49.9 per cent from 55 per cent.

Lion Nathan was purchased by Japanese conglomerate Kirin for $6.5 billion last year and has since been merged with Kirin's dairy concern National Foods to form beer-to-milk business Lion Nathan National Foods.

The latest Lion Nathan quarterly result was issued as part of Kirin's earnings report.

Lion Nathan National Foods chief executive Rob Murray said the group's portfolio of beers continued to boost its market share.

''The investments Lion Nathan has made in its brands, breweries and people have created a strong and agile business,'' Mr Murray said.

Mr Murray said XXXX Gold, the second largest beer in Australia in terms of sales volume, continued its fast paced growth, while Hahn Super Dry had a particularly good summer.

Some analysts have estimated that nearly half of Foster's 5 per cent market share loss since 2005 is due to Lion Nathan acquiring Boags in 2008 and taking distribution away from its competitor.

In New Zealand, the market remained challenging due to that country's recessionary conditions, with the alcohol sector declining 3.3 per cent in the year to December 2009 and the beer market falling 5 per cent in volume terms. Lion Nathan New Zealand outperformed the shrinking market, however, with total volume up 0.4 per cent. It posted revenue growth of 2.3 per cent in the December quarter.

Mr Murray said conditions in the wine industry were challenging. This was due to the global slowdown combined with an oversupply of grapes putting downward pressure on pricing in domestic and international markets.

The strong Australian dollar undermined performance in key export markets, he said.