In its trading update for the year ended September 30, 2015, Lion said total volume in this first year has dropped by 17.4% but by adjusting the focus of the business to the highest potential segments of the market has meant profit has increased on a year earlier.
The company said the drop in volume was due to the sale of its everyday cheese business in May last year and the fact that it didn’t renew its private label milk contracts in Q4 of 2014. A drop in juice sales also contributed to the drop in volume.
The proceeds from the sale of the everyday cheese business to Warrnambool Cheese and Butter factory for A$137.5 million were to be reinvested in “brands, facilities and innovation in higher-value growth categories”.
Also in May last year it opened its expanded and upgraded specialty cheese manufacturing hub in Tasmania, The Heritage. Lion invested $150 million to upgrade the facility making it the largest and most advanced specialty cheese facility in the Southern Hemisphere.
At the time, Lion chief executive Stuart Irvine said “Specialty cheese will be a key value driver for our business, as a growing category that is strategically important to our customers.”
Lion’s priority categories of specialty cheese, milk-based drinks and yoghurt all achieved solid growth.
In October last year Lion Asia Dairy signed a key Chinese distribution partnership which saw a range of Lion’s dairy products supplied across the Guangdong Province.
In August 2014, the business launched the Goodness Project aimed at meeting the needs of consumers for more wholesome, fresh and less-processed foods. It celebrates the goodness of what they have on offer already as well as committing to targets that improve on the goodness.
The company expects it will remove around 170 tonnes of added sugar and 175t of fat from the Australian food supply in the coming year, following reformulation efforts.
