Japanese drinks giant aims to expand

24 July 2009

TOKYO: Kirin, the Japanese drinks giant, is aiming to develop its domestic operations and expand internationally, as it seeks to overcome a number of challenges in its home country.

The Japanese beverage market is said to be uniquely demanding, particularly in terms of the constant need to develop new and innovative products, while the government's chief economist has also recently warned that deflation threatens to hamper an economic recovery in the Asian nation.

Kazuyasu Kato, Kirin's president, said "we aim to be a leading company in Asia and Oceania", and will seek to "bolster our business strength and accelerate our expansion in overseas growth markets" in an effort to achieve this goal.

Such a strategy is necessitated by a range of local and international developments that mean Kirin "would be overwhelmed by the changing environment and left behind unless we take action," he added.

Among the major obstacles facing the Japanese economy are declining birthrates and an ageing population, while beverage manufacturers are also said to be under a dual pressure as the domestic market nears saturation and global competition continues to intensify.

One way that Kirin will seek to overcome these problems is through finalising a merger with Suntory, its national counterpart, a deal Kato says the company will "waste no time" in completing.

If successful, the tie-up would make the newly-formed entity the biggest in the Japanese beer and soft drinks sectors, with annual sales amounting to ¥3.8 trillion ($40.1bn; €28.1bn; £24.2bn).

In revenue terms, this would also help Kirin leapfrog both Anheuser-Busch InBev, the brewing giant itself formed by a merger last year, and Coca-Cola, the US soft drinks manufacturer, and make it among the top five global food and beverage firms worldwide.

The Japanese company has previously attempted to develop its operations outside of its domestic market, such as via the acquisition of Australian beer manufacturer Lion Nathan, while Suntory also took over Frucor earlier this year.

Data sourced from Associated Press/Just Drinks; additional content by WARC staff