August 5/Business Monitor International Ltd. (BMI) -- Leading Japan-based brewer Kirin has entered Russia's canned beer market after launching its leading Kirin Ichiban brand. The brewer already sells bottled beer in the high potential Russian market, and its canned range will be produced by an as-of-yet unnamed domestic brewer. BMI points out that although Russian consumers favor domestic beer labels, the sheer size of the market (an estimated 12.8 billion liters in beer volume sales  in 2008) and its long-term outlook (through 2013, beer volumes are expected to increase by an encouraging 17.6%) should ensure that Russia has the potential to emerge as a useful contributor to Kirin's international business.

Kirin's Russian expansion is the latest move in what has been a busy period internationally in 2009. It is gearing its expansions around the Oceania region and has identified Australia as the spearhead of its diversification strategy. Earlier this year, it acquired the remaining 53.9% stake in Australian brewer Lion Nathan that it did not already own. Away from the Oceania region, among Kirin's most notable moves has been the decision to increase its equity stake in San Miguel Corporation, the parent company of the promising Philippines-based brewer San Miguel Brewery to 48.3%.

Traditionally holding a lower penchant for international expansion than Western food and drink companies, Japanese firms, led by the beer industry, have significantly stepped up foreign investment in an effort to try and curb sluggish trends across a number of food and drink segments. Through 2013, BMI has forecast beer volume sales in Japan to decline by 2.1%, which is a major factor in Kirin's increased boldness outside the confines of Japan. Contributing over 73% to group sales in FY08, the brewer is working to bring down the contribution of its domestic market.

Kirin is not the first Japanese brewer to foray into Russia's canned segment. Asahi - Kirin's main competitor in Japan - already sells canned beer in Russia and boasts the greater brand equity having been present since 1998 (Kirin entered in 2006). As a result, the fate of Kirin's canned beer business, at least on a relative basis to its main rival, is likely to rest largely on the success and indeed scope of its marketing and branding investment.

Neither Kirin nor Asahi are aiming to emerge as household names in Russia. Notwithstanding consumers' partiality to domestic beer brands, on a mass market level, Russia's beer industry is probably impenetrable. The likes of Carlsberg, SABMiller, and AB InBev have locked up the market through their subsidiaries. Instead, Kirin and Asahi will probably rely heavily on the country's growing Northeast Asian expatriate population.  

From the August 17, 2009, Prepared Foods E-dition