Speculation grows about sale of Lion dairy brands

Posted by AFN Staff Writers on 9th December 2013

Sources close to food and beverage company Lion are downplaying suggestions that its dairy business National Foods is for sale, despite growing speculation that it is on the market, according to reports from The Australian newspaper.

Some industry commentators have suggested Lion’s dairy business may be up for sale, while others have said that Japanese companies are not usually sellers, according to The Australian. Lion is a subsidiary of Japanese-based company Kirin.

Lion’s dairy portfolio includes strong milk brands PURA, Dairy Farmers, Farmers Union, Dare, Big M, Moove and Masters M; cheese brands COON, King Island Dairy, Cracker Barrel, Tasmanian Heritage, Mersey Valley and South Cape; and other dairy brands such as Yoplait, Fruche, Thick and Creamy, YoGo and Divine Classic.

Lion’s dairy market share

According to market research organisation Nielsen’s ‘Retail World Grocery Guide 2012’, Lion held 23.4 per cent value share and 17.3 per cent volume share of the Cheese segment; 35.6 per cent value and 35.1 per cent volume share of the Yoghurt segment; 53.5 per cent value and 55.2 per cent volume of the Chilled Dairy Desserts segment; and 24.9 per cent value and 17 per cent volume of the Milk segment.

Australian dairy environment

The talk about the possible sale of Lion’s dairy business comes amid a takeover battle in Australia for Victorian-based dairy business Warrnambool Cheese and Butter (WCB).

Australian Food News reported earlier in December 2013 that dairy co-operative Murray Goulburn had increased its bid for WCB to $9.50 per share. WCB has advised its shareholders to take no action in relation to the Murray Goulburn bid until WCB’s directors have reviewed detailed information about the proposal, including Murray Goulburn’s Australian Competition Tribunal application. The other bidders are Canada’s Saputo and the Australian group Bega Cheese.

Lion appetite for horse trading?

Australian Food News reported in November 2013 that Lion had also stepped in to the battle for WCB by acquiring a 9.99 per cent shareholding in WCB.  There is speculation that this stake is a strategic one to insert the Lion dairy business into the behind-the-scene discussions on a future industry restructuring of the major dairy groups.

Australian Food News has reported previously that  Murray Goulburn had relaunched its Devondale brand and may be interested in additional opportunities for expanding its Australian dairy consumer product range. The high profile brands of Lion could therefore be attractive for Murray Goulburn or Bega Cheese or Saputo and become an adjunct trading currency in horse-trading over WCB.

Speculation about the sale of Lion's dairy brands grows