Big-name Aussie brands like King Island Dairy and Pura up for sale
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Big-name Aussie brands like King Island Dairy and Pura up for sale

The famous Australian flavoured milk brand Big M and other big-name dairy brands like Yoplait yoghurt, Pura milk and King Island Dairy could be up for sale, after the company Lion announced it would conduct a strategic review of its dairy and drinks business.

The review, which is expected to run for no longer than four weeks, will consider all options including the retention of the whole business, its sale, and options in between, such as the sale of some brands and joint venture partnerships.

Pura milk and other well known dairy brands could be up for sale, after Lion announced a strategic review of its dairy and drinks business.

Pura milk and other well known dairy brands could be up for sale, after Lion announced a strategic review of its dairy and drinks business.

Photo: Paul Harris

Lion is owned by the Japanese conglomerate Kirin, and while it is not listed on the Australian stockmarket its brands are well known by Australian consumers and their fridges.

Lion Dairy and Drinks (LDD) also makes products under the brands of Dairy Farmers, Farmers Union, Moove, Dare iced-coffee and Tasmanian Heritage cheese - a leading camembert and brie label. It also owns juice brands Daily Juice and Juice Brothers.

Industry observers believe Lion Dairy and Drinks could attract attention from investors at home and abroad.

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The review is restricted to Lion’s dairy and drinks business and won’t include its Australian beer division, a fact that one observer said is telling. Lion makes beers such as Tooheys, Boags, XXXX and Hahn.

The move to reconsider Lion's dairy and drinks business comes about a decade after Kirin first entered this space in Australia. The Japanese  conglomerate bought National Foods in 2007 for $2.8 billion, and the following year it bought the dairy co-operative Dairy Farmers for $910 million.

LDD’s turnaround phase is now complete.

Lion chief executive Stuart Irvine

Lion chief executive officer Stuart Irvine said that over the last three years the Lion Dairy and Drinks business had grown its brands, improved supply chain efficiency and boosted its quality and service.

“LDD’s turnaround phase is now complete,” he said.

“The investments we have made have grown profitability and created a sound platform for future growth with our high-quality brands and leading Australian cold-chain distribution network at its heart,” he said.

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But he indicated that with the turnaround phase complete, it was time for a pause.

“In order to reach its full potential and deliver its nutrition-focussed growth strategy, LDD requires new capabilities and investment. It’s therefore appropriate before we commence another three-year plan to consider the best pathway forward for LDD,” he said.

In a first half trading update released in early August Lion referred to competitive pressures in the fresh milk market which has faced a number of challenges as supermarkets have pushed downwards on prices.

"In the highly competitive milk market the business continued to position key brands and categories for growth. While white milk remains challenging, Lion out-performed the market and grew value share in the milk-based beverages category, primarily driven by new product innovation and a strong performance from key brands Dare and Big M, both of which posted double-digit value growth," it said last month.

Darren is the mining and agribusiness reporter for The Age and The Sydney Morning Herald.

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