The Diageo deal makes Lion the biggest player in the Australian beer market.
Guinness and Kilkenny are to have a new brewer and distributor in Australia from November, it was announced this week.
Lion has signed an agreement with Diageo to distribute, sell and market Guinness Draught, Kilkenny Draught and Extra Stout, in Australia.
The new agreement extends the partnership Diageo has with Kirin (Lion’s parent company) in the Asia-Pacific region and comes as a blow to Foster’s, who has ceded ground to its rival.
Lion now control 47.5 per cent of the Australian beer market, with the recent acquisition of Stella Artois and Corona aiding that foothold.
Meanwhile, Foster’s controls 44.6 per cent of the beer market here, with Italian beer Peroni among the brands in its portfolio.
Kirin is Diageo’s distribution partner in Japan, and Lion already brews and distributes Guinness and Kilkenny in New Zealand through a pre-existing relationship with Diageo.
Guinness and Kilkenny – which will continue to be owned by Diageo at a global level – has been previously manufactured by Foster’s, with Diageo acting as custodian of the brand marketing and distribution in Australia.
James Brindley, Lion’s managing director said the new deal would strengthen their portfolio.
“These brands strengthen our leading international premium portfolio, with Lion now offering six of the top ten beers in this fast growing segment. Guinness and Kilkenny have fantastic heritage and we are delighted to have the opportunity to further grow these brands in Australia,” said Brindley.
The new deal will have little effect on pubs’ relationships with the Guinness and Kilkenny brands, according to Fergal McCauley, manager at PJ O’Brien’s Irish pub in Sydney.
“We have a relationship with Lion Nathan and Foster’s anyway and that will continue after November,” he said.
Mr McAuley said the new deal will increase Lion’s bargaining power when it comes to renegotiating contracts with pub groups.
“With these products they [Lion] will now be the biggest in Australia.”
He added that the deal would have no impact on the quality of the products and said that Diageo will continue to demand a high standard.
Foster’s will continue to manufacture Guinness and Kilkenny in Australia until October 31, 2012.
