Aug 21, 2015

Kirin buys stake in Myanmar Brewery

Japan's Kirin has acquired a stake in Myanmar's biggest beer company for US$560 million (S$787 million) as it seeks to expand abroad with an ageing population at home reducing domestic demand for its beverages.

A Singapore unit of Japan's second-largest brewer by market value has acquired 55 per cent of the outstanding shares in Myanmar Brewery from Fraser & Neave, Kirin said in a statement. Beer consumption in Japan has slumped since 2001 as people turned to alternatives such as whisky and wine.

Kirin, like many Japanese companies, is looking to offset weak sales in a shrinking domestic market by expanding overseas. Kirin's sales in Japan have dropped 17 per cent from 2010 while revenue from the Asia-Pacific area has climbed 9 per cent, according to Bloomberg.

Chairman Senji Miyake said in February, when he was then president, that the company is seeking acquisition opportunities in Southeast Asia and China. Myanmar is an "exciting market" because of its expected high growth and increasing consumer consumption, Kirin said.

Myanmar, which has emerged from decades of international isolation, has already attracted global brewers. Heineken opened a US$60 million brewery joint venture just outside Yangon last month, months after Carlsberg became the first foreign brewer to set up in Myanmar.

Myanmar Brewery makes Myanmar Beer, Myanmar Double Strong and Andaman Gold brands. It has an 80 per cent share of the nation's beer market, which is forecast by research firm Euromonitor International to nearly double to US$675 million in three years' time from an estimated US$375 million this year.

Beer consumption rates in Myanmar are some of the lowest in Asia at just 3.2 litres per person in 2013, well below the 31 litres per person in neighbouring Thailand, data from Euromonitor shows.

This month, Singapore's F&N agreed to sell its 55 per cent stake in Myanmar Brewery to Myanma Economic Holdings for US$560 million, after a lengthy dispute.

"There's growth potential but there's a risk in that it's already becoming a competitive market," Tokyo-based analyst at Credit Suisse Masashi Mori said of Kirin's plan to buy the Myanmar brewery. He said the price was reasonable but Kirin's overseas track record was patchy.

Source: The Strait Times