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Lion, NZ's largest beer company, agrees to buy cult Upper Hutt brewer Panhead, no price given

Friday 27th May 2016

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Lion - Beer, Spirits and Wine (NZ), New Zealand's biggest beer maker, has agreed to buy Panhead Custom Ales from the family of founder Mike Neilson, its second such purchase of a popular craft brewer after the acquisition of Dunedin-based Emerson's Brewing Co in 2012.

No price was disclosed for Upper Hutt-based Panhead, the trading name of the Neilson family's Brew Strong Ltd. As with the Emerson's purchase, Panhead's Neilson is to stay on with the business, putting his award-winning beers into a Lion stable that includes the Speight's, Lion, Steinlager and Mac's brands. Lion said Josh Drake, a former financial consultant, will be general manager of Panhead, a position he has held for two months, according to his LinkedIn page.

The acquisition underlines the growing popularity of craft beers in a market where overall consumption is declining. An ANZ Bank report on the sector, published last year, said beer sales in New Zealand had fallen 12 percent since 2008, yet off-premise craft beer sales had risen 42 percent between 2014 and 2015 and now had 13 percent of the market.

Lion also owns the Mac's brand beers, having acquired the rights from Nelson's McCashin's Brewery in 2000 and launched its own brand targeting that segment, Crafty Beggars, along with its own mythology, which includes that it was "started as a rogue crew of nine brewers with not much more than their wits and a willingness to misappropriate company resources". Panhead is named for the pan-shaped engine on a Harley Davidson motorbike.

The rise of craft beers has also influenced Lion's mainstream brands, with the Speight's line-up expanded to include a Triple Hop Pilsner and a 5 Malt Old Dark.

Rory Glass, Lion's New Zealand managing director said the company has "no interest" in changing Panhead's formula and that the investment "will free Mike and the Panhead team to do what they do best - brew great beer.”

A media report in January said Upper Hutt-based Panhead produces about 100,000 litres of beer a month, with about 10 percent exported to Australia.

Lion is part of the Australasian beer, wine, liquor and dairy products group own by Japan's Kirin. Lion - Beer, Spirits and Wine (NZ) reported a 21 percent decline in pretax earnings to $55.6 million in the year ended Sept. 30, 2015. Sales fell 5.2 percent to $535 million.

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