Kirin's pursuit of diversified growth has been fuelled by stagnation in its domestic market. Japan's beer industry has battled against market maturity and an aging population for some time, and while innovative new product development has ensured that sales remain healthy, growth is increasingly only achievable elsewhere in the world.
The Japanese firm's most high-profile moves of 2007 saw it acquire the Australian interests of Philippine brewing partner San Miguel Corp for $2.6 billion in November, while October saw it land compatriot drug maker Kyowa Hakko Kogya, also for $2.6 billion. Other notable efforts saw Kirin commence construction of its second soft drinks plant in China and enter into a soft drinks joint venture with Acecook in Vietnam.
Kirin's latest announcement is arguably its most logical, with the bulk of the company's experience lying in brewing. Each of the three target markets will present Kirin with unique challenges and yet each also has sufficient promise to warrant substantial investment.
In Vietnam, Kirin will encounter a market in which per capita beer consumption already stands at a healthy 21.3 liters per annum, but where impressive consumption growth of 50.4% is forecast to 2012; the challenge here being the popularity of economy beers, a necessity given the majority low-income population. India, in which per capita consumption of just 0.9 liters is expected to increase by 30.7% to 2012, is equally difficult in terms of competition and low incomes and yet the sheer size of the market makes it a vital investment for any expansion-oriented brewer.
Thailand arguably poses the most interesting opportunity. A per capita beer consumption growth forecast of just 12.5% to 32.2 liters in 2012 is not markedly different to Japan itself, and yet in Thailand the opportunity is for premiumization, something which Kirin, with its high-end portfolio, should be well set to exploit.
If Kirin moves soon, all three markets could contribute to a 2008 revenue growth target of 16.6% to 2,100 billion yen ($21.11 billion) and in seeking partnerships with company's whose infrastructure is already in place, Kirin is minimizing its risk and maximizing its potential short-term gains.
From the March 31, 2008, Prepared Foods e-Flash