Lion sees hotels as route to bigger market share

By DITA DE BONI

Lion Nathan has intensified its battle for a greater share of the Victorian tap beer market with the purchase of 40 "high-profile" hotels in the state.

At present dwarfed by rival Fosters, Lion hopes to boost its 2 per cent share of the Victorian tap market with the $60 million purchase of the hotels, which the company says will rectify distribution difficulties it has experienced there.

Lion will develop distribution tentacles to a further 300 plus hotels and other venues across Victoria in coming months.

The Hospitality Management Company, owned by Lion, has been established in Melbourne to develop and manage the operation of the hotels.

Speaking from Australia yesterday, investor relations director Warwick Bryan said the company had developed a plan to push into Victoria two years ago, but had taken "some time" to build up distribution channels.

The push to raise Lion's market share in the state will cost the company $100 million overall.

Across Australia, Lion holds a 44 per cent share of all beer-on-tap and slightly less in total market share. But in Victoria the brewer has around 11 per cent of a market dominated by sentimental favourite Fosters-owned Victoria Bitter.

Mr Bryan would not reveal market-share targets, except to say there was "clearly room for growth."

"This purchase is a Victoria-specific strategy. [Hotels] give a good return, as well as achieving distribution objectives, which in turn gives an acceptable return for the entire business."

Fosters and other rival products would still be available at the Lion-owned pubs "depending on customer demand," just as Lion products were available at Fosters-owned hotels, he said.

The hotels are mainly in suburban Melbourne and cater to the 18 to 30- year-old beer drinking target market.

The hotel acquisitions come just six months after Lion announced it had sold 89 South Australian hotel joint ventures for a net price of $A65 million and a profit of $A8 million.

Mr Bryan said the latest hotel purchases were completely different, because in South Australia the licensees had signed agreements with Lion to acquire the premises at the end of a five-year term.

The Victoria marketing push kicked off in January with the launch of Tooheys New in Victoria, a tap version of the Australian operation's flagship brand.

Lion Nathan chief executive Gordon Cairns said the company had "some time ago" identified the Victorian beer market, along with the premium and low-alcohol segments, as opportunities to grow its core beer business.

"What we are seeing today are simply the tangible signs of a carefully conceived and executed strategy which will, over the medium term, confirm Lion Nathan's position as a significant player in the Victoria beer market."