The Melbourne Press Club requires online entries to be available for the judges to see, so this is our three part series on the CUB versus Lion Nathan Victorian pub war.


Dear Judges,

As a one man band (editorially), running an independent news website from home, does not often break any genuine news stories because of a lack of resources.

However, the story we published in our second edition on February 20, 2000, about Lion Nathan swooping on some of Victoria’s prime venues was a genuine scoop. I spoke to enough people involved to be satisfied it was true inspite of Lion Nathan’s subsequent vehement denials.

The Australian followed the story up that week and Lion Nathan did not go public with its purchase of 45 high-profile Victorian pubs for several months.

I felt that the issue has not been properly covered in the Victorian press and therefore travelled to Sydney to attend the Lion Nathan AGM on December 21, 2000.

As you can see from the second story in the series, I raised several key issues about Lion Nathan and gave readers of a detailed insight into the personalities and issues surrounding the company.

The final story in the series added some insights into how the various pubs are travelling and also published for the first time the full list of venues involved. There has been some excellent feedback from readers as we basically have a company embarking on a strategy to deny drinkers in various trendy venues around town the opportunity to drink Australia’s most popular beer, Victoria Bitter. Using an online outlet we have been able to follow this issue in great detail to both inform and entertain our readers. The style of journalism is a little adventurous at times but that is what the web is all about.

Stephen Mayne


Here are a couple of the emails we have received from readers about this issue.


Been a CUB drinker since before I was allowed to be. My local, Governor Hotham, is now a Lion Nathan hotel. Service has gone down, the old owner used to do 1500 meals on a Friday and Saturday night, now I think they would be lucky to do 500. Lion Nathan made the old owner an offer he couldn’t refuse, and a week later he was gone. Quick turn around.

They must have got sick of people driving out of the bottle shop, because they now sell a select range of CUB there. Although you can’t see it and have to ask for it specifically. The dude in the bottle shop told me “We have it (vic), but we have to have it out of site, and can only sell it to people who ask for it, we don’t let on that we have it and we can’t sell it inside”.

And they now charge a dollar for using their EFTPOS machine. Robbery!

You better add the Glenferrie Hotel to that list, as it too has been ‘re-born’ in Toohey’s new livery.

Cheers, Grant P!


Q: What does Lion Nathan and Spain have in common? A: Their beer sucks sh*t.

Thanks for the pubs list – I can now safely avoid Lion Nathan beer. The Dogs bar in st kilda has gone downhill since they were bought out.

Cheers n’ Beers (Coldies and VB ones of course!)

Tim R


Now, let’s check out the three stories we have entered.


Published: February 20, 2000, on

By Stephen Mayne

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.



Published Dec 21, 2000, on

By Stephen Mayne

The Lion Nathan AGM in Sydney on December 19 was a very low key affair with only about 40 non-aligned shareholders bothering to turn up. There were 200 watching via video link from Auckland still smarting that New Zealand’s second biggest company has done a runner to Australia.

Even though they tried to reject my proxy on the technicality that the husband and wife team appointing me should both have signed the form, chairman Douglas Myers, the richest Kiwi on earth, let me ask a few questions.

The first issued related to the disaster that is Lion Nathan’s two breweries in China. The business turned over $47 million last year for a loss of $27 million and did similar numbers the year before.

Check out these crazy numbers: the company has production capacity of 300 million litres a year in China which is just below the 357 million litre annual Victorian market. So they are pretty big breweries but last year only churned out 70 million litres of beer which was sold below cost.

So the company has ploughed $200 million into an investment that is operating at 22 per cent of capacity. CEO Gordon Cairns admitted they needed to double revenues to break even and it wouldn’t matter if that came from volume or price increases.

Gordon said that the entire Chinese beer market is producing profits of about $US100 million a year but this is being shared between 500 breweries. Poor old Lion Nathan is stranded with no established brands fighting against uncommercial government-owned breweries in a slugfest with multinationals such as Heineken and Annheiser Busch, the world’s biggest brewer.

Lion Nathan followed Foster’s into China with most of the other world’s biggest brewers in the mid 1990s and now look like they are following them out although the write off so far is only $120 million compared with the $300 million that Foster’s wrote off.

Those multinationals hanging in there include South African Breweries, Asahi, Suntory, Heineken and AB, but most of the others have left, the most recent being Carlsberg which sold out to a local player a few months ago.

Lion Nathan’s aggressive push into Victoria was the next big issue Crikey raised at the meeting. The company’s raid on Melbourne’s trendy inner-city pub market was Crikey’s biggest scoop off the year (edition 3 late Feb) and the board was defending shelling out $66 million for 45 pubs to its shareholders. The annual report described the move as “laying siege to Victoria” after the company set “out to capture Victoria with a move worthy of the ancient Greeks’ Trojan Horse”.

Gordon is an Irishman with a sense of humor because he tried to claim as evidence that lots of CUB executives were visiting the pubs on the fact that complaints about the unavailability of Victoria Bitter were on the rise. We understand that Naughtons hotel in Carlton is running a secret unmarked VB tap from the back bar to keep some of its regulars happy.

The amount of transparency around the pub raid was surprising. Most pundits reckon they’ve gone over the top with what they’ve paid but Gordon said the scenario was as follows: Lion Nathan’s cost of capital is 11 per cent and the pubs are predicted to return 7 per cent a year based on what they’ve paid. However, if Lion Nathan can lift its Victorian market share from a dismal 13.8 per cent to 15 per cent then they will achieve the necessary 11 per cent return on capital. The signs are good so far with and the move is being supported by an $80 million 10-year sponsorship of Victorian racing which will see the Foster’s Melbourne Cup become the Hahn Premium Melbourne Cup next year.

Douglas defended the racing sponsorship indulgence after I quoted former CUB boss Nuno D’Aquino saying that Lion Nathan’s Australian boss Walter Bugno was driven by his ego because he was a horse flesh owner himself.

Dougie pointed out that Walter’s thoroughbred ownership is “very modest” and that CUB had “not been particularly good” at servicing the racing industry and that Walter still had his job whereas Nuno had been moved on. Interestingly, he also said that Victoria was not really a free market for beer and this was why they had adopted this Victoria-specific strategy. Unlike Foster’s, which runs 5000 pokies nationally, Lion Nathan is not trying to become a gambling pusher to prop up beer profits. All its pubs are pokies free venues designed to capture trendy young drinkers for life. Frankly, I used to like drinking VB at the Builders Arms in days gone by.

The other issue we raised was the question of Lion Nathan always following Foster’s and therefore not having first mover advantage. They were second into China, second into pub ownership, second into racing sponsorship and second into wine. Dougie rather disingeneously responded that they were first into beer – that was more than century ago son. The purchase of a 28 per cent stake in New Zealand’s biggest wine maker Montana has already yielded an $87 million paper profit – Sir Ron Brierley’s GPG group must be kicking itself for selling out too early and too cheaply. Ironically, the move was only taken to stop Foster’s from snaring the stake in a competitive response to the Trojan’s Horse move on the Victoria pub scene. It’s a real tit for tat game between the big brewers and it will be interesting to see if Lion Nathan takes over from McDonalds as principal sponsor on the AFL next year. Dougie says it has no present plans to do this.

Lastly, when it came to re-electing the directors, I tied to get one of the four representatives of Japanese brewer Kirin to speak to the meeting. The Japs have 46 per cent of the company after buying out Dougie’s controlling stake two and a half years ago for about $4.60 a share, still above the current price of about $4.20.

There was much criticism at the time that minority shareholders did not receive such a generous offer – something the law would have required if Lion Nathan was based in Australia at the time. Dougie’s response was that Kirin would have only bought 20 per cent because they never wanted control. One of the Kirin reps spoke but his English was so bad it was difficult to make out what he said. Sounded something like Kirin being happy with the current board structure. It is a bit odd that the company moved to Sydney with such fanfare yet still only has two Australian based directors in Gordon and Olympics freeloader Kevan Gosper. Dougie promised that another director would be added soon and suggested she’d probably be a woman – let’s hope she’s an Aussie Sheila.

After the meeting Dougie wandered over for a chat to ask if I used to work for CS First Boston. Clearly the PR flaks had not briefed him well. I’d spoken to Dougie four or five times over the years as a journalist – he even flew me to Auckland once for a profit announcement where he became the first person I’ve ever heard use the C word at a press conference. He was describing the privvy council which had made some adverse ruling against the brewer and Dougie’s line was that “I went to school with some of these c—s”. Nice one Dougie.

He was at his free-market and feisty best during out chat, saying that New Zealand was full of F—wits and Stalinists and he was moving to London next year to continue his efforts as a philanthropist.

He might have come to Sydney but for Australia’s ludicrously high personal tax rates. Too right Dougie.

After the meeting there was time for a quick beer and a few meat pies at the Recital Hall in Sydney’s Angel Place. The finance director wondered over and said most of the shareholders in attendance had some sort of Kiwi connection. He also said the holdings of Australia’s institutions since the trip across the Tasman had jumped from 10 per cent to 20 per cent and New Zealand institutional holdings had done the reverse.

A chap from CUB rang me a couple of days after the meeting to say that the email to subscribers describing the meeting had been circulated throughout the company and created much mirth. We look forward to them all subscribing as I’m not aware of anyone at CUB who has subscribed.



Published January 20, 2001 on

By Stephen Mayne

The tit-for tat beer wars between Lion Nathan and CUB continue at a merry pace with CUB just securing the exclusive pourage rights to Subiaco stadium in Perth.

CUB have made amazing inroads into the Perth market over the years. Cast your mind back to 1986 and Bondy then had more than 90 per cent of the market but this is now back down towards 50 per cent and falling fairly rapidly.

It would be fair to say that CUB probably paid several million to Subiaco for the pourage rights when you consider that they paid almost $20 million for the exclusive pourage rights at Docklands Stadium in Melbourne last year. It was this move and the new pourage rights deal at the MCG that saw CUB deliver a very disappointing second half profit in August last year. All eyes are focused on the upcoming first half profit for Foster’s in February.

Ironically, that $20 million CUB paid Colonial went straight to Ron Evans and the boys at Spotless to terminate their venue management contract. Colonial lost $25 million last year and is in about as much strife as Stadium Australian since ANZ pulled out of its $50 million naming rights deal. Who’d want to be in the business of owning stadia? It’s a dog.

Similarly, stories abound of how bad the Lion Nathan strategy of buying up 45 trendy Victorian pubs is going. They’ve paid a motza for all the pubs around Melbourne Uni so it is now a VB free zone. Many students are walking that bit further to get the cherished green label icon. We understand that one of the pubs around Melbourne Uni have a sneaky unmarked VB tap out the back for die-hard customers who refuse to drink anything else.

And can you believe Lion Nathan bought Melbourne’s most famous night club, The Metro in Bourke St, and built an almighty bar in the middle of the stage so that they can no longer have any major bands play there. It’s madness.

At first Lion Nathan said they paid about $45 million for the pubs but now the publicly stated figure is up to $65 million. If you know the individual prices paid for some of these pubs then send them through and we’ll try to add it all up.

For instance, we’re told by a neighbour of the Metro that the famous Bourke St night club changed hands for $9.5 million – the biggest price paid for a single venue. And another theory is that Lion Nathan’s Japanese parent Kirin is a 50-50 joint venture partner with its 45 per cent subsidiary, thereby reducing the direct spend by Lion Nathan.

Crikey does not break too many genuine news stories but the Lion Nathan move on Victoria’s pubs was one such example last February. For some reason, no-one has ever produced a full list of the pubs they bought so here it is. If you have a story about the ownership change from the one of these pubs we’d love to hear from you.

The 45 pubs Lion Nathan have bought

21 Arms Hotel, Ballarat

Albert Park Hotel, Albert Park

Builders Arms Hotel, Fitzroy

Byblos Caf Bar (formerly Station Bar), Prahran

Canada Hotel, Carlton

Casey’s Nite Spot, Hawthorn

Cherry Tree Hotel, Richmond

Clarendon (formerly Intrepid Fox), Sth Melbourne

Clude Hotel, Carlton

Court House Hotel, Bendigo

Darby Ogills, Bendigo

Dogs Bar (Hotel Columbo), St Kilda

Eclipse Nightclub (Royal Mail Hotel), Bendigo

Felix Bar, St Kilda

Geebung Polo Club, Hawthorn

Geebung Polo Club, Flemington

Geelong Hotel, Geelong

Golden Gate Hotel, Sth Melbourne

Governor Hotham Hotel, Hawthorn

Grace Darling Hotel, Collingwood

Hogs Breath Caf, Ballarat

Imperial Hotel, Sth Yarra

Limerick Arms Hotel, Sth Melbourne

Melbourne Depot, Richmond

Metro Nightclub, Bourke St City

Molly Blooms, Port Melbourne

Naughtons Hotel, Parkville

Perseverance Hotel, Fitzroy

Preston Hotel, Geelong

Prince Alfred Hotel, Carlton

Provincial Hotel, Fitzroy

Queensberry Hotel, Carlton

Rattle n Hum, Ballarat

Red Eagle, Albert Park

Richmond Club Hotel, Richmond

Rob Roy Hotel, Fitzroy

Sante Fe Hotel, Melbourne

Star Bar, Bendigo

Studio 54, Bendigo

The London Bar Caf, Port Melbourne

The Match Bar and Bakehouse, Bendigo

The Max Hotel, Geelong

Tonic Lounge Bar, Bendigo

Veludo Bar Restaurant, St Kilda