Three largest Japanese brewers -- Asahi Group Holdings, Kirin Holdings, Suntory Holdings -- increasingly looking for overseas acquisition opportunities as domestic consumption declines
April 29, 2012
The three largest Japanese brewers — Asahi Group Holdings Ltd., Kirin Holdings Co. and Suntory Holdings Ltd. — are increasingly looking for overseas acquisition opportunities as domestic consumption declines, The Wall Street Journal reported April 27.
Combined, these three companies have spent US$23 billion on overseas purchases during the last five years. After hitting a peak in 1994, the domestic beer market in Japan has declined 23%.
During the last five years, Asahi, Kirin and Suntory combined spent almost one-third of their revenue — nearly five times more than in comparison to the previous 10 years — on overseas acquisitions, according to Dealogic (Holdings) Plc.
In 2011, Japan’s three largest brewers had a combined global market share of 5% in terms of global beer volumes, in compared with Anheuser-Busch InBev NV’s and SABMiller's combined market share of 28%, Euromonitor reported.
Roland Berger Strategy Consultants partner Roland Berger said that it is difficult for manufacturers to acquire a meaningful market share in any given market without also controlling the leading local brand. If companies are too slow, they won’t be able to secure good deals, he added.
The issue for Japan’s three largest brewers is whether they will be able to secure value-creating deals and profitably manage their already-acquired assets.
Last week, Asahi Group Holdings said that it was considering purchasing Calpis Co., a Japanese soft-drinks manufacturer, for a reported 100 billion yen ($1.2 billion).
Asahi was reportedly considering purchasing StarBev, a Czech brewer, earlier this year before ultimately deciding against it, according to people who had knowledge of the issue. Within the next three years, Asahi aims to boost its overseas sales to 20%-30% of total revenue, up from its current level of 6.4%.
Over the next several years, Suntory will be able to spend approximately 300 billion-400 billion yen on overseas acquisitions, company executive officer Satoshi Hamaoka said.
Since 2007, Kirin’s spending on overseas acquisitions has topped 1 trillion yen.
Following a $3.9 billion deal to purchase Brazilian brewer Schincariol, Kirin President Senji Miyake announced in February that the company would focus on using its existing acquisitions to create synergy rather than on additional purchases.
Kirin's market capitalization has fallen almost 40% in comparison to five years ago, while its operating margins have remained at 6.9%.
The primary source of this article is The Wall Street Journal, New York, New York, on April 27, 2012.