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Lion New Zealand’s boss – the rather aptly named Rory Glass – accidentally pours me a creamy-headed Kilkenny instead of the Lion Red I had asked for at the brewery’s staff bar. The managing director is apologetic, but it’s an easy mistake as several beers jostle for attention at the taps.
It brings back into focus comments he made in our earlier interview – about the need to create brand recognition rather than brand noise.
That distinction is only more urgent in a market ramped up by Rugby World Cup festivities.
Sure, the amber stuff is selling well right now, but it’s not all . . . er . . . beer and skittles.
Just as retail industry analysts have warned, those in the liquor business also know that, after the RWC show ends this month, so, too, might be the propensity to spend on their wares.
AC Nielsen figures for the four weeks to September 18 show pack-beer sales are up 12 per cent nationally since the cup began. “Steinlager is up close to 40 per cent which demonstrates how both Kiwis and international tourists have embraced the brand,” Glass says.
But all parties have to end and Glass admits he could see a slowdown in November after the World Cup. That was certainly the experience after the 2005 Lions tour.
As to brands clashing, there is the battle currently between Lion’s Steinlager, which, with a 25-year association with the All Blacks, is the team’s longest standing sponsor. And then there is Heineken, brewed under licence by competitor DB since 1994, which has rights to the Rugby World Cup branding itself.
There is an extremely fine legal line in what Lion can and cannot use in its current advertising because of those rights. It can refer to All Blacks, the brand, for example, but not the World Cup.
Lion is happy with how Steinlager has fared since the World Cup began last month.
TNS Conversa research measuring adoration rates for different beer brands has shown that, as a trademark, Steinlager (Classic, Pure and Edge) is New Zealand’s most- loved brand, Glass says.
The icing on the cake during the World Cup has been the inspiration to use the quarter-century connection with the ABs and revive the old brand, Steinlager White. It was a calculated risk, with Lion producing a finite, and secret, quantity of the white cans.
Supported by a big TV ad campaign, it has proved popular, tapping into people’s nostalgia.
“We’re ahead of where we expected to be – we’ve sold over half of what we’ve produced in the marketplace,” Glass says.
The campaign – in which we follow a fan who keeps one of the white cans (discontinued in 1992) after the All Blacks’ one and only World Cup win in 1987 – cleverly sidesteps a legal World Cup minefield by not actually showing any rugby or venues.
Lion has 1000 staff in New Zealand and The Pride, its purpose-built $250 million brewery in Auckland, is almost a year old. With a little over 50 per cent of the total beer market, it is the country’s biggest brewer, and in Australia is second behind Foster’s.
Glass replaced Peter Kean in the top job just three months ago, having formerly been national sales and marketing manager. Before Lion, he had worked for supermarket retailer Progressive Enterprises. “I was in there when beer came into supermarkets in December 1999.”
Beer was one of the few products supplied to the supermarkets that held appeal to him in terms of “jumping the fence and going to the other side”, he says.
But the appeal was wider than just beer. He was also keen to join Lion because it is such a highly regarded company.
“It was a fantastic opportunity to stay in the FMCG [fast moving consumer goods] sector but to move from the retail end of the spectrum to the brand owner end.
“Lion was really attractive to me because it’s an iconic business with a great heritage and a reputation as a high- performing organisation with strong brands and quality people.”
The company has been 100 per cent Japanese-owned since 2009 when Kirin agreed to buy the 54 per cent of Lion it did not already own in a $3.4 billion deal.
It has invested $350m in New Zealand in the last three years.
“If anything the full Kirin ownership has meant greater autonomy for the New Zealand business,” Glass says.
“They recognise the need for local expertise in the marketplace – it’s totally symbiotic. They’ve allowed the New Zealand management to run the business, which has been fantastic.”
Glass’ emphasis in the next financial year will be on simplifying the business.
“Given we are a multi- beverage business spanning a number of alcohol and non- alcohol categories, it’s critical we focus on the brands and the market opportunities that will make a difference.”
Subdued retail spending or not, Glass says there are plenty of opportunities there for the taking.
A recent example is the cider category, in which Mac’s Isaac’s has taken a clear market lead.
Lion also recently launched the more male- focused Speight’s cider. Once perceived as old-fashioned, cider’s sales within New Zealand have grown 80 per cent in the past two years.
“All the retailers have recognised the opportunity of cider and accordingly have given it a lot more space. I think everyone’s been surprised by the amount of growth in there,” he says.
“It just shows the existing brands weren’t servicing the market effectively.
“We’ve found some brands that talk to the market in a better way.”
In another example of exploiting a niche, in June Lion launched its Frusion line. The non-alcoholic premium soda range was designed to meet what it saw as customer dissatisfaction with the non-alcoholic drinks available for adults during social occasions.
One of the key thrusts of Glass’ new strategy is to extend the global reach of Steinlager Pure, which is now in 15 countries – the latest being Ireland, Singapore and Dubai.
Its Steinlager Classic range still sells in 23 countries. “The success story for Steinlager Classic is it’s just been ranged by [British supermarket chain] ASDA in the UK.
“That was a real breakthrough for us . . . it’s really good recognition for the brand.”
And Glass says Lion will continue to look for growth opportunities for Lindauer sparkling, one of 12 wine brands it recently bought from Pernod Ricard.
“We are seeing a slowdown from a volume perspective but when people are participating in the category they are prepared to spend a little more and we’re seeing good growth in the premium segments across all categories.
“As people begin to age, again it’s a worldwide phenomenon, we’re going to have to play more in those categories around health and wellbeing [mid-strength beer, low- carb and alcohol-free] and around premium . . . that’s going to fit in with a lifestyle.”
Yep, the glass is definitely half-full.