New Zealand: The head of Lion Nathan's New Zealand beer business, Julian Davidson, has resigned amid market concerns about the health of the group's Kiwi brewing operations, Sydney Morning Herald communicated on March 8.

Lion shares have sunk more than 13 per cent this year in the midst of poor beer sales for the entire group but it is the performance of its Kiwi division, Lion Breweries, that is the chief concern for some analysts. Credit Suisse First Boston recently downgraded Lion Breweries' 2005 earnings by 10 per cent - the division accounts for one fifth of the group's earnings - while Macquarie Research Equities yesterday suggested it was losing supermarket sales to rival DB Breweries.

Mr Davidson has run Lion Breweries since the start of 2002 and has worked at Lion Nathan for 19 years but the company said there was no connection between his departure and the division's wobbly performance. "Mr Davidson said when he took on the role his intention was always to spend two or three years at the helm," the company said. "He has decided it is time for a change."

Lion Nathan chief executive Rob Murray recently described the post-Christmas performance of the Australian and NZ beer divisions as "disappointing". Lion blamed poor weather and the introduction of the Holiday Act, which affected pub volumes in NZ, but confirmed previous 2005 net profit guidance for the entire group of $230 million to $235 million.

Its Australian brands include Tooheys, Hahn and XXXX. It sells Lion Red and Speights in NZ. NZ brewing was a disappointment for Lion Nathan throughout 2004: earnings were down 5.5 per cent to $82.3 million.

The job of running the division falls to Lion's Kiwi wine and spirits boss, Peter Kean. "[Lion Breweries] is confronted with a challenging environment," CSFB's Larry Gandler noted.

Mr Gandler said the division was experiencing "slowing economy, smoking bans, flat premium category with new imported introductions displacing [Lion] volume, and the perennially declining Lion Red".

Macquarie's Greg Dring oted: "Lion Red and Speights are failing to hold share against DB Draught and Tui." Lion Nathan is also the subject of market speculation it is looking to do a deal with spirits distributors Swift & Moore or Maxxium. Lion Nathan established the Bacardi Lion partnership with Bacardi-Martini less than two years ago to boost is share of the growing ready-to-drink market. The Sydney company has made no secret it was keen to boost its sales of spirits but sources played down suggestions a deal with Swift & Moore or Maxxium was on the cards.

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