31 May 2019: The nation’s leading alcohol beverage company, Lion NZ, is proud to report a third year of topline sales growth from $585m to $593m, during a year of major transformation for the company.
Setting Lion up for the future was the key focus for 2018, with significant investment put behind modernising the business and priming it to compete in a rapidly evolving market. Key to this was a once-in-a-generation IT transformation bringing around 500 historic (30+ years old) applications running across the business into one cloud-based platform, SAP S4Hana. The sheer scale of the project, involving a global team of 550 people over two years, while impacting net profit in the short term, will give Lion the agility to lead in a global market, evolve with new technologies and provide a world class customer experience.
With Lion’s new system only going live in September 2018, it is expected to impact net profit across two fiscal years. Despite this, the fundamentals of the Lion business remain strong, with underlying profit in line with previous years once you exclude IT transformation costs. Lion notes that topline sales growth is continuing in the current financial year and is above 3% year to date.
Rory Glass, Lion NZ Managing Director, says: “Lion is the first company in Australasia to bring the SAP S4Hana system into the cloud.Transformation like this is not for the faint hearted but in order to set Lion up for the long-term we accepted that there would be a short-term impact. We live in a highly sophisticated digital world and customers expect an easy and convenient experience, much as they have with an Uber or Amazon. Over time this will revolutionise our business and when fully optimised, we’ll be able to provide a real time customer delivery experience and seamlessly update to new technology as it emerges. Things like predictive analytics, facial recognition and artificial intelligence are now within our reach.”
In 2018 Lion’s future focus extended to the expansion of its portfolio and investment in adjacent business ventures. On the portfolio front Lion opened the first sustainable craft brewery in New Zealand, Christchurch based The Fermentist, and acquired one of the nation’s original craft brands, Harrington’s. In Auckland, Lion opened a $20m ‘spiritual home’ for Little Creatures at Hobsonville Point which is currently exceeding sales targets by 70%. Glass is thrilled with the response from customers so far: “We thought Little Creatures would be a popular brand and destination in Auckland – we had no idea how popular.”
As well as focusing on the core business, Lion made its first major step into an adjacent category, welcoming the legendary Havana Coffee Works into the family. More recently Lion also acquired Teza Iced Teas. The two brands will support Lion in its target of achieving 10% NSR from its non-alcoholic portfolio by 2025. Glass has called out the Havana acquisition as a major step in Lion’s history: “Today people are just as likely to catch up for a coffee as they are a beer and we see the Havana coffee brand as the jewel in the crown of the coffee world. This is a big step for us - unlocking another massive social occasion.”
Alongside new portfolio additions, Lion also invested in new territories, with the creation of a standalone business unit, Lion Ventures. The team has just launched their first venture, remote working app YOWO. The app utilises the shared economy by linking remote workers with inspiring hospitality spaces that are underutilised during off peak hours.
While looking forward, Lion’s core business also remained strong, driven by a leading innovation pipeline and stellar craft beer performance. Speight’s Summit Ultra grew 360% from $1.5m to $6.9m, making it the biggest innovation in beer for 2018, while Gordon’s Pink Gin marked the biggest innovation in the spirits category in the last 20 years. Lion’s craft beer brands also stole the show, steered by Panhead (22% YoY growth), Emerson’s (10% YoY growth) and Little Creatures (37%).
“Underpinning this was a standout performance from our largest brand, Speight’s Gold Medal Ale – which was the biggest beer brand in the country by volume in 2018 following an award winning The Dance campaign. It’s pretty remarkable to experience such strong growth amidst a declining mainstream beer category,” Glass says.
Glass also acknowledged Lion’s customers and people for their support and resilience during a year of disruption: “An IT transformation of this scale has not been without its challenges and we are incredibly grateful that our customers and our people have supported us over this time. As a result, we have managed to keep the top line in growth and maintain strong internal engagement levels of 90% - keeping us firmly in the top quartile of Global High Performing Companies,” ends Glass.
Source: 2YR AC Nielsen Scan Data (based on $ sales).
About Lion NZ
Lion NZ is New Zealand’s leading alcohol and beverage company with brands including Speight’s, Steinlager, Panhead, Wither Hills, Havana Coffee Works and Hopt Soda. The company employs around 1,200 people across its head office and The Pride in Auckland, Speight's, Harrington’s, The Fermentist, Emerson’s and Panhead breweries, the Wither Hills winery, Havana Coffee Works and its LK retail stores. Lion has both the Gender and Rainbow Tick and has won many awards for closing the gender pay gap and embedding flexible working into the business. It is a founding member of responsible drinking charity Cheers!, runs its own alcohol education platform called Alcohol&Me and provides funding to support Health Promotion Agency’s moderation programmes. Lion is also a founding signatory to the Climate Leaders Coalition and part of the Sustainable Business Network.
For more information on Lion NZ, visit www.lionco.com