Where is growth going to come from?

With Foster´s Group and Lion Nathan now enjoying 95 percent of Australia´s beer market, growth by acquisition of new customers is limited and thus company performance depends heavily on the configuration of the “value chain” with regard to deployment of resources and delivery of products to customers.

The companies differ in approach: Foster´s has a complex value-chain strategy while Lion Nathan has outsourced its supply-chain activities to a joint venture with transport operator Linfox called BevChain to keep costs low. Observers have noted that Foster´s more flexible approach may better match market trends and Lion Nathan´s strategy may become strategically vulnerable. Deutsche Bank suggests that a merger between Lion Nathan and Coca-Cola Amatil. which already has a joint venture with SABMiller in Australia would be beneficial as the bank contends that growth in the Australian beverages sector can only come through expansion across categories as the lines between stand-alone manufacturers of beer, soft drinks, wines and spirits are becoming increasingly blurred.