The deal between Heineken and Lion Nathan Australia is based on Heineken's success in growing its share of the premium sector of the Australian beer market. The Dutch brewer say that it will combine Lion Nathan Australia's local brewing capabilities and national sales and distribution expertise to further increase the presence of the brand.
The joint venture, named Heineken Lion Australia, brings the companies together in a sales and distribution deal, which also involves the option to brew Heineken and potentially other Heineken company brands in existing Lion Nathan Australia breweries. The Heineken Lion operation aims to be fully operational by 1 July 2004.
The joint venture creates a distribution platform, which will allow a combined portfolio of brands to be sold in the major metropolitan areas, including Sydney, Melbourne, Brisbane, Adelaide and Perth. In addition the existing Lion Nathan sales force will sell the Heineken brand in other non-metropolitan areas.
The joint venture will also combine Lion Nathan's local brands and specialties - including Hahn Premium and James Squire Pilsner - alongside the Heineken brand.
Heineken, until now an export only product in the Australia market, will continue to be marketed as a premium product. The premium beer sector in Australia represents 9.7 per cent of the Australia beer market and is one of the fastest growing segments, with 2003 volume up 13 per cent over 2002.
Thony Ruys, Heineken CEO said of the agreement, "This joint venture provides us with a strong and competitive portfolio of brands combined with an excellent distribution platform that now allows us to realize the potential of this rapidly growing premium sector".
Managing director of Heineken Australia, Hans-Erik Tuijt will now become the managing director of Heineken Lion. "This is a natural evolution for Heineken in Australia. Based on the success of the Heineken brand here, we now know that Heineken has the potential to substantially grow its share in this market. This joint-venture operating structure will allow us and Lion Nathan to realize that potential", he said.
Confirmation of the deal will come as good news for Lion Nathan, particularly at a time when the company is struggling financially. Only this week the company announced that its half yearly profit had slumped 24 per cent to AUD84 million(€48.8m. The company blamed a write down on the value of its Australian hotel chain of AUD34 million, further exacerbated by a 13 per cent decline in the turnover from its New Zealand operations, alongside increasing competition in the China market.
The deal with Lion Nathan in Australia adds to the brewer's growing interests in the Asia Pacific region. Currently the company's brand portfolio includes Tiger Beer in Singapore, Bintang in Indonesia, Reeb in China and Bivina in Vietnam.