31 October, 2014

Lion Dairy & Drinks’ Three Year Turnaround Strategy

Our mantra is focus – investing in our strengths, efficiency and quality relationships with our partners and stakeholders.

Creating the right platform for growth

We’ve recently put in place the right organisational structure to grow the business.

Lion is firmly focused on improving the way we do business and the efficiency of our manufacturing footprint. Much of what we have changed is in direct response to the feedback we have received from our stakeholders and has the aim of making Lion easier and more efficient to work with.

Key to the new structure in our Dairy & Drinks business is the separation of juice and dairy, with the appointment of a juice Managing Director reporting to Peter West who retains direct responsibility for dairy.

In addition, the Dairy & Drinks Sales function has been organised into two teams focused on meeting the specific requirements of Grocery and Convenience & Food Service customers. Performance in product quality, manufacturing and logistics will also improve with dedicated Leadership Team appointments.

Focussing where we can win

In a complex dairy market, it’s all about focus. We have great, profitable brands in specialty cheese, yoghurt and flavoured milk with significant growth potential and it makes sense that we would play to those strengths.

To take advantage of the opportunity with those brands and categories, we know we need to be more robust in our pack, price and channel decisions. Innovation will be a key focus, particularly in better for you products with nutritional benefits and we share more about our new nutrition initiative, The Goodness Project, here.

Customer service is also critical. With less complexity in our business, better processes and an improved distribution model, we’re determined to lift our service levels and exceed customer expectations. To be frank, we know that in many cases they have simply not been good enough.

We have already made some very important investments in our manufacturing capability, including a state of the art specialty cheese making facility in Burnie, Tasmania, and additional investments in the capacity and flexibility or our yoghurt site in Morwell, Victoria. We’ll be further attacking our cost base in the chase for optimal efficiency and greater manufacturing and distribution effectiveness.

Last but by no means least, relationships with farmers are crucial to success in our Dairy & Drinks business. We are excited to be able to engage with our farmers and other suppliers around a clear and compelling growth plan as a committed premium brands company. Read more here.

A premium approach to the Asian dairy opportunity

A key plank of Lion’s 10 year strategy is the formation of a fourth business unit, led by Duncan Makeig, and focused on opportunities for our branded dairy portfolio in Asia. We are already making good progress. The business unit organisational design is close to completion and work is underway to identify opportunities in our priority markets of China and Indonesia.

This initiative will see Lion place more focus and resources to growing our high-value branded dairy products in key Asian markets. We are a premium branded dairy business and we do not intend to play at the commodity end of the market. We will leverage our unique strengths that no other dairy exporter can match – our deep brand building expertise, strong FMCG experience and having consumers in our DNA; our core competency around building effective partnerships, which happen to be the only route to market in many Asian economies; and an Asian owner with extensive regional contacts and expertise.

While the international business unit will take time to grow, we believe the increasing demand for trusted dairy products in Asia, coupled with our strengths in building high-equity, nutritionally powerful brands and strong relationships in Asia all mean Lion is in a good position to unlock these opportunities and build our presence across Asia for long-term growth.

We’ll share more progress in our next Lion Update.

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