Under the cloak of darkness,the Japanese controlled New Zealand brewer Lion Nathan is buying up several well known Victorian night clubs and pubs.
SOMEONE is raiding the Victorian 18-24 night club and pub scene.
Someone has bought The Metro in Bourke Street, Chasers in St Kilda Rd, The Star Bar in South Melbourne, the Geelong Hotel, the London Hotel in Port Melbourne, the Depot in Richmond, Frostbites and the Golden Gate hotel.
Crikey suspects this someone is none other than Lion Nathan, the embattled New Zealand headquartered brewer controlled by Japanese brewing giant Kirin.
Lion Nathan’s share price is sagging and it is desperate to be seen to be doing something in the Victorian market which has been a black hole for them ever since they bought Alan Bond’s Australian brewing assets ten years ago.
While its Tooheys, Swan, West End, XXXX and Hahn brands have long been under attack from CUB in their respective states, Lion Nathan have failed to ever make a serious dent in Victoria.
CUB has the Victorian market sewn up. They have exclusive selling rights to the AFL, the Grand Prix, Crown casino and for the Spring Racing carnival for another couple of years. It also has a legion of loyal Victoria Bitter drinkers, which now has an incredible 30 per cent of the market nationally.
Lion Nathan’s new Australian managing director Walter Bugno loves the horses and has bought the naming rights to the Hahn Premium Melbourne Cup for several million dollars starting in a couple of years.
Now Bugno and his team believe they need to wrap up a large chunk of the Victorian club and pub market if they are to break the Foster’s stranglehold. Don’t expect to get a VB in Metro or Chases in the future.
Four years ago CUB chief executive Nuno D’Aquino promised to resign if Lion Nathan ever obtained more than 15 per cent of the Victorian market. It has done this fleetingly on a couple of occasions but never sustained it. Now it appears they intend making an all out and expensive assault on Victoria and the latest strategy is a multi-million dollar splurge on some of Victoria’s best known venues.
According to one industry insider, Lion Nathan have acted under the cloak of secrecy using different companies for each negotiation. However, accountants Arthur Anderson are apparently a common part of each negotiation along with very tight confidentiality agreements.
Lion Nathan spies told Crikey that the brewer has used a series of different companies named after characters in The Lion King. For instance, Tainada, a bird in the Lion King, now owns The Metro, the Star Bar and the Depot. Similarly, Raffini, an old Monkey in The Lion King, now owns the Golden Gate hotel and a number of other venues.
One venue manager told a Crikey spy that his pub had just been sold to a big company over an ocean but not very far away. Surely, it could only be Lion Nathan although we have not put it directly to the company yet.
Lion Nathan have consistently spurned the venue acquisition strategy that Foster’s have pursued over the past five years. Along the way Foster’s have turned themselves into Australia’s biggest pokies operator with about 5000 machines.
Foster’s don’t like to talk about it much, especially when that devout Catholic John Ralph was chairman. Afterall, gambling is a major social ill which causes suicides, bankruptcy and family breakdowns. It also generates big profits and higher share prices for blue-chip establishment companies such as Foster’s and Tabcorp.
Former Financial Review Chanticleer columnist turned feature writer Ivor Ries remains convinced that the rerating of the Foster’s share price since BHP sold out three years ago is almost entirely due to the pokies and pubs strategy.
Not only has it boosted beer and wine sales by locking competitors out of the venues, it has also generated fabulous new cash flows through the pokies.
So, could we now have a situation whereby famous Melbourne venues are controlled by a giant Japanese brewer?
There are listed night club companies in the US and the UK but so far the Australian industry has remained highly fragmented.
Kerry Packer tried to stitch up the Melbourne theatre market with David Marriner at one point and at first was widely suspected to be the man behind the raid on Melbourne’s venues, the strategy being to take some of Crown’s competitors out of the market.
The Metro and Chases won’t mean much in the Tokyo headquarters of Kirin, but the plunging Lion Nathan share price would be resonating loudly.
Kirin bought a 45 per cent state a couple of years back at about $4.50 a share. Lion Nathan chairman Douglas Myers, the richest individual in New Zealand, was the major seller and must be thankful the Japanese paid so much with the stock now trading at round $2.60.
Kirin has blown about $500 million on paper so far. The question now is whether the raid on Victoria’s racing industry and better known venues is a legitimate strategy or an act of desperation more akin to throwing good money after bad.
Crikey suspects it will take more than a few venues and sponsorship of a horse race to make Lion Nathan the king of the Victorian beer market.