All the Beer in China
Lion Nathan's brewing operations in Australia, New Zealand and China together sell around one billion litres of beer each year. Its numerous brands are valued collectively at $1.8 billion, and include Tooheys, XXXX, West End, Emu and Hahn. It also distributes two of its brands - Steinlager and XXXX - in Europe and North America. The company delivered double-digit earnings growth in a challenging environment this year, with net profit after tax for the six months to 31 March 2002 of $100.1 million - up 12.5 per cent on earnings for the comparable period in the prior year.
The Australian business is the largest business and the primary earnings driver, accounting for 70 per cent of Lion Nathan's assets and in the 2000 fiscal year, 80 per cent of earnings before interest and tax (EBIT). New Zealand, with 20 per cent of the assets, accounts for virtually all of the balance of the EBIT.
With Australians continuing to guzzle more beer every year, and with new brand strategies on the table, Lion Nathan is confident of its ability to continue the level of earnings growth achieved in Australia in the 1999 and 2000 fiscal years. The picture in New Zealand, where consumers are drinking less beer every year, is more challenging but the company expects a combination of a stable pricing environment and cost initiatives to deliver modest growth. In China, Lion Nathan expects a recovery in beer consumption and cost reduction initiatives to slowly ease the losses currently being incurred.
In response to the highly competitive environment, in April 2000 the company announced it would move its head office from New Zealand to Australia, becoming one of many other NZ companies who have left home to base their operations overseas in recent times for cost reasons. In January this year, Warren relocated to Sydney after being appointed companywide CIO last August, reporting to managing director of technical services Phil Warburton. Here he oversees the work of about 65 people in Australia and New Zealand, and manages an expense budget of about $25 million a year, depreciation inclusive.
A Lion Nathan employee since the late 70s, where he began in the finance side, Warren became IT director New Zealand five years ago. At that time he says the business systems were reasonably rudimentary. There was a core transactional system, but with the business focus of the time concentrated around invoice processing/payment/sales and a little bit of sales analysis, the business requirements of that system were fairly simple.
"Until that stage we'd had a brewing business in New Zealand, a wine and spirit business, a retail business, all of which had somewhat disparate solutions. At that stage the focus was on getting synergies from those solutions, but also taking the business forward into the late 90s with stronger business solutions, leveraging new technologies and making them available to the business where there was a business need. So clearly the focus was on technology to meet business needs as opposed to technology for technology's sake."
Warren brought together the business solutions of New Zealand Wines and Spirits and Lion Brewery in New Zealand and developed arguably the first successful business to consumer (B2C) model in New Zealand for Liquor King. He also developed and deployed data warehousing and sales analysis tools for the business.
During his stint as IT director the position became a New Zealand MD direct-report role, allowing Warren to sit alongside his peers at the executive table.
"When I first took on the IT director role there was a CIO of Lion Nathan who was based in Sydney and an IT director based in New Zealand and an IT director in Australia," Warren explains."The New Zealand IT director initially reported to the CIO, and then reported in line to the country MD. So the reporting lines changed around - there was a dotted line at one stage to the country MD and a solid line to the CIO, and then we turned that around and made it a solid line to the country MD and a dotted line to the CIO."
Warren says it is a change that has prepared him well for the bigger Australian role, where he has responsibility for New Zealand and Australia directly and China indirectly from an IT point of view. Adjusting to the new environment in Australia proved relatively easy, Warren says. Although the two countries had been run independently from an IT point of view, the Sydney IT environment was quite similar to the one he was used to, thanks to heavy levels of liaison between the two IT directors and their teams.
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