One of the two major players in Australian beer, Lion, has this year demonstrated its versatility as a liquor supplier, winning major accolades across all three sub-categories in the 2024 Australian Drinks Awards. This includes two of the available three Contribution to Industry Awards, being named joint winner of the Supply Chain Management award along with the Brown Family Wine Group, and receiving two Fan Favourite and one Gaining in Popularity Brand Awards.
Following on from recent conversations with Lion’s People & Culture Director Jane Hill and Connections Director Chris Allan, Drinks Trade caught up with Sales Director Kerry Appathurai to discuss Lion’s current focus and where she sees opportunity in Australian beer moving forwards.
Drinks Trade: What are the current focuses at Lion Australia?
Kerry Appathurai: It was wonderful to see Lion win in the area of sustainability at the recent drinks awards, with a clear focus on being a force for good as a company, and also winning for supplier of the year in Inclusion & Diversity, as ensuring we are a business that is focused on our culture and our people is something we are extremely proud of.
Last year we announced Lion’s purpose ‘Making the Moment Mean More’ and a big part of this is putting consumer moments at the core of all we do. We have focused on leveraging data and insights to create winning strategies through products, innovation, promotions and activations to support our customers in unlocking category growth.
It is no secret that the beer industry, like many, has faced some serious headwinds. From the impacts of COVID through to the current cost of living crisis, it’s been tough, but beer remains an important foot traffic driver for our customers. So we have a huge role to play in understanding how we support our customers to bring in more people, more often, supporting revenue growth and making the moment mean more!
DT: Can you dive a little deeper into Lion’s new strategy and what you’ve learnt through it?
KA: We got complete clarity about the choices that we needed to make, linked directly to the needs of consumers and our customers. That meant being clear around the brands that we were going to support that would deliver growth to our customers and clear around understanding our consumers and the key occasions that they’re shopping for. How we could best meet these and where the white space was. A key part was understanding what are the things that are actually holding people back from buying beer? We have done a great deal of work in understanding consumer preferences, when and why they choose to drink different beverages, what’s important to them and where is beer delivering to this and where isn’t it?
In the past, many consumers grew up with their first drink being the beer that their dad drank or the beer that their grandfather drank. But consumers are making different choices now. What is important is ensuring we are supporting the beers that people have loved for years, and continue to love, and at the same time innovating and launching beers that people will love tomorrow and into the future, beverages that better meet today’s needs. We need to evolve what Beer can mean to people as their lifestyles are also evolving.
DT: What are these ‘beers of tomorrow’?
KA: Consumers are looking for more mindful choices. So with that, we are focused on recruiting the next generation of drinkers through overcoming the most common barriers within beer. Aussie drinkers are paying close attention to carbs, calories and sugar in their drinks. Innovation in beer that overcomes these barriers without compromising on taste will be the key to unlocking recruitment into the category. It is an exciting time for the category, as we have just launched a new Ultra Zero Carb segment.
We have launched zero carb beers under Hahn, Toohey’s and XXXX – three big iconic brands. We also have Ultra Zero Carb with Byron Bay Lager exclusively in BWS and Dan Murphys. They are all under 100 calories and have lighter options across a range of abv strengths – full and mid strength – to cater to a broad range of drinking occasions.
DT: Who’s the target market for Lion’s mindful choices offerings?
The barriers to beer are well known, perception of challenging taste profile through bitterness, & bloating. Consumers across all generations are shifting their attitudes towards preventative living, adopting wellbeing-based lifestyles and seeking out healthier nutritional content in their choices. Australians really like beer and its role in culture but are looking for products that overcome these challenges and address the needs of today. For 25-34 year olds especially, there is a focus on health and fitness with people looking for new solutions that complement their lifestyles. We are tapping into what people are buying. Low Carb options are growing much faster than the category, and we know there is a big opportunity to create an ultra zero carb segment and drive recruitment.
There is also continued growth in Mid-Strength beer, with Australia being one of the biggest mid-strength markets in the world. It is why brands like XXXX Gold, Hahn 3.5 and Great Northern Crisp have been so successful. When you overlay low carb, together these segments are the growth engines for the category.
Hahn is a great example that has delivered this for the category. Hahn pioneered areas of category forward innovation – driving low carb through both full strength and mid-strength and also with gluten free. The brand continues to support segment growth across all states in both the On Premise and in Retail. This highlights the continued opportunity with low carb but also the unlock for Ultra Zero Carb.
That’s why we’ve decided to push the boundaries. If we really want to unlock growth for the beer category, we’re going to have to push to do something a little different. And because we’re already a low carb market, how do we actually accelerate category growth to drive recruitment and show consumers that we get it – consumers want great tasting, easy drinking beer – that is a more mindful choice.
DT: Obviously the reduced carb beer sector has a lot of momentum at the moment, but do you feel the trend might plateau over time?
KA: We think that there’s still legs here because low carb is in such huge growth. But we need to look at how we’re going to continue to recruit new consumers into beer. It has to be that combination of easy drinking beer, plus giving consumers something that really does feel different. We need to remember that reduced carb beers are growing 3x faster than the category and Ultra is about levelling this up!
One of the most compelling examples is Coke Zero Sugar. If you look at that, you had a soft drink category that was declining, which saw the innovation and launch of Diet Coke. A very successful product for many years and continues to be. But then 20 years later, they evolved again, one step further with Coke Zero Sugar. A great case study in understanding evolving consumer needs, and innovating to meet them.
DT: Other than carb reduced options, how else is Lion hoping to recruit more younger legal drinking aged consumers?
KA: A great tasting beer that meets evolving needs from a consumption perspective is one area, but it is also about meeting the needs of each purchase occasion. We are doing a great deal of work on pack formats and understanding shopper missions and ensuring we have the right pack formats, at the right prices for the right occasions.
As an example, brands like Hahn and also Stone and Wood that continue to drive recruitment, recently launched into 10 packs in the independent market and have been very successful in meeting new occasion needs.
We also continue to build our RTD portfolio, with Japan’s number 1 RTD Kirin Hyoketsu, now available in Lemon, Peach, Pineapple and a Variety pack, along with continued innovation from White Claw and supporting further category growth with James Squire Ginger products.
DT: Stepping slightly away from reduced carb and the mindful choices trend, you handle both off- and on-premise in your role… What are the biggest differences between the two at the moment?
KA: Yes, as Sales Director for Lion Australia, my remit does cover anywhere you can purchase Lion products and the incredible customers that we partner across both the Retail landscape and the On Premise. From a sales trend perspective, there are still a lot of similarities between the two channels in terms of what consumers are looking for. As mentioned, Mid-strength beer and low carb are definitely segments that we continue to see grow in both pack and tap formats. This is still underpinned by easy drinking lagers.
Understanding the importance of premiumisation in the category is also key, and we continue to receive great feedback from customers and consumers on the availability of Stone & Wood in both the on and off premise and in particular the performance of its Pacific Ale in driving sales for our partners. Guinness and Heiniken also continue to see momentum and are supporting premiumisation of the category in both channels.
Understanding the different occasions for the On Premise vs Retail is critical, Creating pack / price architecture with the right products and formats to deliver to shopper missions in the retail environment; and supporting the On Premise with foot traffic driving activations and events to bring consumers in, give them a reason to stay longer and ensuring that the right products are on offer to also enable that. Our commitment is that we will continue to push the boundaries in driving growth for our customers, by leveraging data and insights to ensure we have the best products available across both retail and on premise to drive their business. Importantly this is also supported by dedicated resources across our business, supporting our partners with marketing, activations and revenue growth strategies that both meet the needs of customers and consumers. At the heart of it, partnering for category growth by making the moment mean more.
