E-Malt.com News article: Australia: Heineken sales drop in Australia as consumers don’t like it being brewing locally

The Australian arm of global beer giant Heineken has suffered a drop in sales as more trendy inner-city types with beards spurn the local brew because it is made at Lion's commercial brewery in Sydney, and not imported like many other premium beer rivals, Brisbane Times reported on March 6.

Heineken's joint venture with food and beverages group Lion squeezed out a tiny increase in profit last year, even though sales went backwards by 9.2 per cent to A$65.8 million.

The joint venture brews Heineken under a licence for the Australian market at Lion's Lidcombe brewery in western Sydney.

The fact Heineken is brewed in Australia for the local market rather than being an "imported" beer seems to matter to discerning customers.

Pablo Theodoros, manager at East End Cellars in the trendy East End of Adelaide's CBD, says sales of Heineken and other more mainstream premium beers have fallen away and there are regular instances where customers will ask specifically if it is the imported Heineken being stocked or the one brewed in Australia.

"A lot of people do ask about that and they then tend to go for a locally brewed craft beer," he says.

Craft beer, where more than 150 micro-breweries have set up around Australia and are championed mainly by inner-city dwellers, is the fastest growing segment in the beer market, with analysts estimating it is growing at between 10 to 15 per cent a year.

The premium beer market is also still growing as a category, but mainstream beer has been in decline for the past six years. Total beer consumption in Australia has fallen to its lowest levels since World War II because of a combination of changing consumer trends, drink driving laws and excise increases.

The Heineken joint venture is now in its 11th year after being established in 2004 when the Dutch brewer partnered with what was then known as Lion Nathan to try and give the Heineken brand more momentum and to take advantage of the rising demand for premium beers in the Australian market.

Heineken Lion Australia made a net profit after tax of A$12.6 million for the 12 months ended September 30, 2014, up from A$12.2 million a year earlier according to the joint venture company's accounts which have just been lodged with the corporate regulator.

Lion, which in 2009 was taken over by Japanese conglomerate Kirin Corporation after a A$3.4 billion buyout, sells mainstream beers XXXX Gold, Tooheys and West End in its own beer business, which also includes James Boag's Premium Lager among its more upmarket, premium brands.

The Heineken Lion entity in its annual report said sales revenue for the year ended September 30, 2014 had fallen to A$65.8 million from A$72.5 million a year earlier.

The Heineken Lion vehicle paid two dividends of 62.5¢ each in both June, 2014 and October, 2014. The European parent Heineken NV, is the world's third-largest brewer and last month foreshadowed sales and margin growth were likely to slow in 2015 across its worldwide business after a spike in 2014 partially fuelled by its World Cup soccer sponsorship.


06 March, 2015