Kirin Holdings Co. Ltd in Beer World
June 2010
Kirin Holdings - Beer
Scope of the Report
© Euromonitor International
Scope
• 2009 figures are based on part-year estimates.
• All forecast data are expressed in constant terms; inflationary effects are discounted. Conversely, all historical data
are expressed in current terms; inflationary effects are taken into account.
• Alcoholic Drinks coverage:
Alcoholic
Drinks
235 billion litres
Wine
27 bn litres
Beer
184 bn litres
Spirits
19 bn litres
RTDs/
High-strength
Premixes
4 bn litres
Cider/perry
1.5 bn litres
Note: Figures may not add up due to rounding
Disclaimer
Much of the information in this briefing is of a statistical
nature and, while every attempt has been made to ensure
accuracy and reliability, Euromonitor International cannot be
held responsible for omissions or errors
Figures in tables and analyses are calculated from
unrounded data and may not sum. Analyses found in the
briefings may not totally reflect the companies’ opinions,
reader discretion is advised
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Kirin Holdings - Beer
© Euromonitor International
Strategic Evaluation
Competitive Positioning
Market Assessment
Category and Geographic Opportunities
Operations
Brand Strategy
Recommendations
3
Kirin Holdings - Beer
Strategic Evaluation
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Kirin Company Facts
Kirin has looked for overseas expansion
Kirin
Headquarters
Tokyo, Japan
Major Regional
Involvement
Asia Pacific, Australasia
Category
Involvement
Beer, Wine, Spirits, Soft Drinks,
World Beer Volume
Share 2009
1.9%
Beer Volume Growth
47.0%
2009
Kirin Beer Volumes 2000-2009
4,000
Volume (litres mn)
3,500
3,000
2,500
2,000
1,500
• Kirin has expanded its presence internationally,
•
•
•
•
particularly in Asia Pacific and Australasia.
It has acquired total control of the Australasian brewer
Lion Nathan and has expanded its equity holding in the
Pilipino brewer San Miguel. It also owns the Four Roses
distillery in the US.
The company has acquired operations in Australia and
China in soft drinks and food.
Kirin has stated it intentions to increase its revenues from
sources outside Japan, to counteract a declining and
highly competitive domestic market.
Kirin also owns Coca-Cola bottler Coca-Cola Bottling
Company of Northern New England, USA.
Complete beverage portfolio in Japan
• Kirin has operations in beer, soft drinks, wine and spirits
in Japan.
• It is also one of several Coca-Cola bottlers in the country.
• In 2009, Kirin announced that it was forming a joint
venture with the global spirits producer Diageo in Japan.
1,000
500
0
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Kirin Holdings - Beer
Strategic Evaluation
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Financial Assessment
• Kirin has been hit by the strength of the yen,
Kirin Group FY 2009 Financials
¥ (bn) (% growth y-on-y)
Sales
2,278.4 (-1.1)
Operating Income (after
goodwill amortisation)
128.4 (-12.0)
Net Income
49.1 (-38.7)
EBITDA
212.8 (-19.6)
Sales Breakdown by Segment, ¥ bn,
2009
Other
11%
Pharmace
uticals
9%
Soft Drinks
and Foods
32%
Alcoholic
Beverages
48%
particularly against the Australian dollar in 2009. The
company has substantially increased its exposure in
alcoholic drinks, food and beverages since the
acquisition of National Foods and gaining control of
the brewer Lion Nathan.
• Alcoholic Beverages made up the largest proportion
of sales and income in 2009 and should continue to
do so.
Operating Income (after goodwill
amortization) by Segment, 2009 Yen
Other
bn
3%
Pharmace
uticals
23%
Soft
Drinks and
Foods
5%
Alcoholic
Beverages
69%
Note: This excludes Corporate and Eliminations deductions that
in 2009 totalled ¥19.6 bn.
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Kirin Holdings - Beer
Strategic Evaluation
© Euromonitor International
SWOT - Kirin
Operations in Asia
Pacific
Wide Beverage & Food
Portfolio
Exposure to the
Japanese Market
• Asia Pacific is the fastest
• A wide beverage and food
• The Japanese market is in • Kirin has operations and
growing region for beer.
Kirin is well placed to
benefit from this increase
with operations and equity
stakes in China and the
Philippines.
portfolio in Japan and
Australia could limit the
impact of a poor
performance in its
alcoholic drinks business.
decline with an ageing
and declining population
being the major factors of
this decline.
Small Presence in China
equity holdings in China
but these are small. The
dynamic Chinese market
is set to drive the majority
of global beer growth.
Strengths Weaknesses
Opportunities Threats
Strength of the Yen
Strength of Growth in
Asia Pacific
Consolidation of the
Beer Market
• The current strength of
• Asia Pacific is expected to
• The increasingly
the Japanese yen against
other currencies in Asia
Pacific and Australasia
gives it greater buying
power for acquisitions.
be the largest growing
region in absolute volume
terms for beer over the
2009-2014 period. Kirin
and its equity holdings are
in a good position to
expand in the region in
their existing and
potentially new markets.
consolidated nature of the
global beer market could
limit the number and/or
push up the costs of
acquisitions.
Competitive Threat
• Japan‟s fiercely
competitive market could
prove an issue if Kirin
does not keep on
innovating as well as its
rivals. With other large
brewers looking for growth
in Asia Pacific, it may also
come under threat from
new entrants.
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Kirin Holdings - Beer
Strategic Evaluation
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Kirin Vision 2015 Strategy Plan
Overview
• Kirin has developed a strategy – Vision 2015 - for the company as a whole, based around three core strategies
against three group consolidated targets.
• This strategy has been implemented to increase Kirin‟s revenues and profits and to protect it from declining markets
and intense competition in its domestic Japanese market.
Core Strategies
Consolidated Targets:
Implement
strategies to
become an
integrated
beverage
group.
Build the
health and
functional
food
business as
a new
business
pillar.
Internationalise
the group
Three targets for entire
Kirin group to achieve by 2015
Operating
income
ratio of
over 10%
Achieve ¥3
trillion in
sales
(including
alcohol tax).
¥2.5 trillion
in sales
(excluding
alcohol tax)
Overseas
sales ratio of
approximately
30% (sales
excluding
alcohol tax
and operating
income)
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Strategic Evaluation
Kirin Holdings - Beer
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Driving Growth Through Acquisition
Recent Acquisitions
• Kirin has acquired several assets and equity stakes since 2006 in several sectors including alcoholic drinks,
packaged food and soft drinks in several markets in Asia Pacific and Australasia. These acquisition are to mitigate
the declines in its domestic Japanese market and lay foundations for future growth.
Non-Alcoholic Drinks Acquisitions
• Kyowa Hakko Group – Kirin has acquired a 50.1% stake in Japanese pharmaceutical group in a strategic alliance.
Kirin and Kyowa Hakko then merge both companies‟ pharmaceutical companies under the Kyowa Hakko Kirin
Group.
• Kirin has acquired National Foods from San Miguel Corporation for US$2.52 billion in December 2007. National
Foods is a large Australian producer of diary foods and beverages.
• Kirin has increased its stake in Shanghai Jinjiang Kirin Beverage & Food, a soft drinks company based in China,
from 57.6% to 93%.
Alcoholic Drinks Acquisitions
• In 2006, Kirin acquired a 50.12% stake in Japanese wine company Mercian Corporation. Mercian is a leading wine
and RTDs company and will look after Kirin‟s Japanese wine portfolio, while Kirin will manage Mercian‟s RTDs and
shochu operations.
• Kirin acquired the Two Dogs RTD brand in Japan from Pernod Ricard Australia in 2006. Kirin had been importing the
Two Dogs brand since 1996.
• Kirin acquired a 25% stake in brewer Hangzhou Qiandaohu, for US$38.1 million.
• Kirin acquired a 49% stake in San Miguel Brewery from parent company San Miguel Corporation for US$1.19 in
January 2009. San Miguel is the leading brewer in the Philippines, with a near 90% market share. San Miguel
Brewery then acquired its international brewing arm from parent company San Miguel Corporation in December
2009, for US$300 million. The operation has six breweries in China, Hong Kong, Indonesia, Vietnam and Thailand.
Kirin swapped a stake in San Miguel's parent company, San Miguel Corporation, for an increased stake in the
brewing operation. It is also in the process of acquiring San Miguel‟s spirits business. The parent company San
Miguel Corporation still has control of San Miguel Brewery and is currently in the process of divesting several
operating units to fund the acquisition and development of new business in power generation, mining and heavy
industry, Kirin has deepened its exposure to San Miguel Brewery in the last tranche of divestments.
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Kirin Holdings - Beer
Strategic Evaluation
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Lion Nathan Acquisition
• In October 2009, Kirin acquired total control of Lion Nathan, the number two Australasian brewer, for US$2.6 billion.
Kirin already held a substantial 46% equity stake in the brewer, which was acquired in 1998. Lion Nathan had
operations in Australia, where it was the second ranked brewer with a 41% market share in 2008, and was New
Zealand‟s leading brewer, with 52%. Lion Nathan also has a small fine wines, spirits and RTDs business operating in
Australasia, including a joint venture with Bacardi for the distribution of its spirits portfolio in Australia.
• The acquisition added nearly 940 million litres, equal to a 50 basis points increase in Kirin‟s global market share in
beer. At Australasian level this give Kirin a 41.1% market share in 2009 in beer.
• In addition, in January 2008, Lion Nathan (then 46% owned by Kirin) purchased J. Boag & Son, a Tasmanian brewer,
for US$302.8 million, from San Miguel Corporation, further extending it presence in Australia. Increasing its
Australian volumes by 24 million litres or 110 basis point market share increase in the Australasian region.
• Beer volumes in Australasia are expected to grow at a CAGR of just 2% over the 2009-2014 period, equal to an
additional 201 million litres, with a general trading up trend to premium beers. However, this compares favourably
with the Japanese beer market, which is forecast to decline at a CAGR of nearly 1%, equal to a decline of 160 million
litres, with a trading down trend to trend to economy lager.
Major Brewers in Australasia by Volume 2000-2009
Volume (litres mn)
2,500
2,000
1,500
1,000
500
0
2000
2001
2002
Foster's Group Ltd
2003
2004
2005
2006
2007
Kirin Holdings Co Ltd
Lion Nathan Ltd
2008
Others
2009
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Strategic Evaluation
Kirin Holdings - Beer
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Enters Into Joint Venture, Makes Small Disposals
Enters into a joint venture with Diageo in Japan
• Kirin has ended its agreement with Pernod Ricard, the world‟s number two spirits producer.
• Kirin enters into a joint venture with Diageo after Diageo dropped its previous Japanese distributor Sapporo for the
Guinness, Kilkenny and Smirnoff Ice beer and RTD brands. Diageo will hold a 51% stake in the venture, with Kirin
holding the remainder. The deal also includes Diageo‟s Captain Morgan, Crown Royal, Godiva, Myner‟s Rum,
Seagram‟s Seven Crown, Seagram‟s VO and Gilbey's Gin and Vodka, which Kirin already distributed. In addition, 13
more brands were added, including Tanqueray Gin, Bailey‟s, I W Harper and Johnnie Walker Black and Red Labels.
• Diageo‟s luxury and super luxury malt and blended Scotch whisky brands stay with its 50/50 joint venture in Japan
with MHD Diageo Moet Hennessy. Diageo also owns a 34% stake in Moet Hennessy.
Disposes of several small operations
• In addition to Kirin‟s acquisitions in alcoholic drinks, the company has made some disposals:
• Raymond Vineyards and Cellars: US Napa Valley-based winery to Boisset Family Estates, the US division of
French wine producer Boisset.
• Stake in Pernod Ricard: Kirin divested its 3.7% voting right stake in Pernod Ricard after entering the joint
venture with Diageo.
• Kirin Agriibo Businesses: In 2010, Kirin agreed to sell its Agriibo business units to H2 Equity Partners, a Dutchbased private equity company. The deal is due to complete in March 2010.
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Kirin Holdings - Beer
Strategic Evaluation
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Kirin Holds Several Equity Stakes in Other Brewers
Increased stake in San Miguel Breweries
Philippine Beer Market by Volume 20042014
• Kirin acquired a 49% stake in the Philippine company
2,000
Volume (litres mn)
San Miguel Breweries, which in turn has acquired
control of San Miguel Breweries International. This
has extended Kirin‟s Asia-Pacific presence with
increased access notably to Hong Kong, China and
Vietnam.
• In total San Miguel Breweries and International
generate 1.6 bn litres of beer sales in 2009.
• San Miguel Brewery is also currently in the process
of acquiring Ginbera San Miguel, San Miguel
Corporation‟s gin business, which is the leading
spirits company in the Philippines.
1,500
1,000
500
0
Stakes in Chinese brewers
Chinese Beer Market by Volume 20042014
equity stakes in Chinese brewers:
• A 25% stake in Dalian Daxue Brewery, acquired in
November 2004 for ¥3.87 billion. It is based in North
East China and operates in three provinces.
• A 25% stake in Hangzhou Qiandaohu Brewery, which
is based in Zhejiang Province in China.
Volume (litres mn)
• As well as it own operations in China, Kirin owns two
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
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Kirin Holdings - Beer
Strategic Evaluation
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Deals Strengthen Presence Domestically and Internationally
Broadens Japanese brand portfolio
• Volume sales of vodka, rum, stout, RTDs and cream-
Broadens
Japanese
Brand
Portfolio
Diageo Kirin JV
RTDs, Spirits, Beer
Mercian
Wine, RTDs, Shochu
Two Dogs
RTDs
based liqueurs all grew over the 2004-2009 period in the
Japanese market against the general decline in spirits
volumes led by the decline in whisk(e)y, with large
declines in Japanese whisky, bourbon/other US whiskey
and blended Scotch whisky.
• Mercian‟s position in wine combined with Kirin‟s existing
distribution of international wine brands has
strengthened the latter‟s presence in the wine market.
Increases international presence
• The acquisition of Lion Nathan and increasing its equity
Increases
International
Presence
Australasia
Asia Pacific
stake in San Miguel widens Kirin‟s revenue generation
base outside of the declining Japanese market.
Gains Control of Lion Nathan
• The proposed acquisition by San Miguel Breweries of
Australasian alcoholic drinks
Ginbera San Miguel, the spirits arm of parent company
market
San Miguel Corporation, is also beneficial to Kirin, as
Increases equity stake in San
Ginbera is the leading spirits company in the Philippines.
Miguel
Volume sales of spirits in the Philippines grew by a
Increases exposure to Asia
healthy 32% over the 2004-2009 period and are
Pacific markets, spirits and beer
expected to grow at a CAGR of more than 3% over the
in the Philippines
2009-2014 period.
Gains equity stakes in Chinese
• Kirin has increased its exposure to Asia Pacific beer
brewers
markets including China, Hong Kong, Indonesia,
Increases presence in growing
Vietnam and Thailand, which are generally performing
Chinese beer market
better than Japan.
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Strategic Evaluation
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Proposed Merger with Suntory Fails
• In 2009, Kirin and Suntory had discussions regarding combining their operations, but revealed in early 2010 that they
•
•
•
•
had failed to reach terms, which both parties were happy with.
Both companies have similar operations - alcoholic drinks, non-alcoholic drinks and food, with some overlap in
geographic reach. A combined entity would have had greater buying power.
With Kirin being the number one brewer and Suntory the number three brewer in Japan, the combined entity would
have a combined market share of nearly 46% (based on 2009 data), and thus dominate the Japanese market. In
China also, the combined entity would hold a volume share in beer of almost 2%; closer to 2.5% when including
Kirin‟s equity holdings in that market and thus enhancing its prospects in the world‟s largest and fastest growing
volume beer market.
The deal is thought to have failed, because both companies could not agree on their stakes in the combined entity.
The deal did make strategic sense, as increased volumes in Japan would allow for synergies to be developed from
overlapping operations, which would increase economies of scales in the different business segments. Outside
Japan, this would have strengthened both companies‟ operations in several markets including the Chinese beer
market, where both are relatively small players.
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Kirin Holdings - Beer
© Euromonitor International
Strategic Evaluation
Competitive Positioning
Market Assessment
Category and Geographic Opportunities
Operations
Brand Strategy
Recommendations
14
Kirin Holdings - Beer
Competitive Positioning
© Euromonitor International
Kirin Under-Performs the Global Beer Market
• Over the 2003-2008 period, Kirin under-performed the global beer market, due to its major presence being in the
mature, declining and competitive Japanese market.
• Increasing its equity holding and thus gaining control of Lion Nathan in 2009 was the major reason for Kirin
outperforming the global market in 2009 and the only reason for its growth in the year.
• Gaining control of Lion Nathan should help partially mitigate the volume decline in the Japanese market.
Global, Japanese and Kirin Volume Beer Volume Y-on-Y 2003-2009
50
Volume Growth Y-on-Y%
40
30
20
10
0
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
-10
Global Beer Average
Kirin
Japanese Market Average
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Kirin Holdings - Beer
Competitive Positioning
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Rise in Global Rankings Through High-Growth Markets
Rise of emerging brewers and consolidation
Beer - Top 12 Global Companies, 2009
Rank
Brewer
% volume share
1
A-B InBev
19.0
2
SABMiller
9.6
3
Heineken
6.7
4
Carlsberg
5.9
5
China Resources
4.5
6
Tsingtao
3.2
7
Modelo
3.0
8
Molson Coors
2.8
9
Beijing Yanjing
2.5
10
FEMSA
2.3
11
Kirin
1.9
12
Asahi
1.6
• Carlsberg has strengthened its global position with its
5-Year
Ranking
Trend
•
-
•
•
•
•
-
part in the Scottish & Newcastle acquisition, with the
company becoming the fourth largest brewer in 2008.
Heineken‟s part in the Scottish & Newcastle acquisition
and InBev‟s acquisition of Anheuser-Busch improved its
ranking by one place, to third, in 2008.
InBev‟s acquisition of Anheuser-Busch strengthened its
position as the global leader by volume. This has been
reduced to some extent by divestments to pay off the
debt accrued by the deal.
Brewers with exposure to Latin American, Eastern
European , Middle East and African and certain Asia
Pacific markets grew faster than companies absent from
these markets over the 2005-2009 period. This is due to
the faster growth in these markets compared to the
mature markets in Western Europe, North America and
Australasia.
The leading Chinese brewers in particular have seen
their volumes boom with the growth of the Chinese
market, and several have entered the global top 10
rankings.
Kirin has strengthened its position, particularly through
gaining control of Lion Nathan in 2009, but also through
extending its equity holdings in China and in San Miguel.
This has deepened its exposure to markets with better
growth prospects than its domestic Japanese market.
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Kirin Holdings - Beer
Corporate Positioning
© Euromonitor International
Competitive Activity Overview 2008-2010
SABMiller
AB InBev
Molson Coors
• Acquires Grolsch.
• Joint venture in the US with
Molson Coors, creating
MillerCoors.
• Extends import operations in
Western Europe.
• InBev acquires Anheuser-Busch.
• Makes several divestments in South
Korea, US, UK and Eastern Europe to
pay down debt accrued in the
acquisition.
• Joint venture in the US with
SABMiller.
• Acquires 5% of Foster‟s, the
number one ranked
Australian brewer.
• Acquires 50.1% stake in
Cobra beer outside India.
China Resources
Heineken
Modelo
• Snow now the largest global
beer brand.
• Acquires four more
breweries in China.
• Acquires elements of Scottish &
Newcastle.
• Announces joint venture with Anadolu.
• Acquires assets in Africa, Western and
Eastern Europe.
• Announces proposed acquisition of
FEMSA.
• Objects to InBev‟s takeover
of Anheuser-Busch and
starts arbitration
proceedings.
Anadolu
Asahi
• Forms a joint venture with
Heineken in several
markets; venture looks to
jointly acquire Uzbek
operation.
• Acquires assets in Georgia.
• Acquires a 19.9% stake in
number two ranked Chinese
brewer Tsingtao.
• Buys Cadbury Schweppes‟s
Australian beverage unit for
A$1.2 billion.
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Kirin Holdings - Beer
Competitive Positioning
© Euromonitor International
M&A Activity Boosts Leading Brewers’ Volumes
2008 acquisitions increase volumes, 2009 growth is hit by wider economic issues
• The acquisitions in 2008 increased volumes, but growth in 2009 is hit by the global economic crisis.
• Brewers with exposure to both Western and Eastern Europe have been hit the hardest by the declining volumes in
key markets. A-B InBev‟s disposal programme to pay down debt has also had a negative impact on its volumes.
Leading Global Brewers Volumes 2007-2009
Anheuser-Busch InBev
SABMiller
Heineken
Carlsberg
China Resources
Tsingtao
Modelo
Molson Coors
Beijing Yanjing
FEMSA
Kirin
Asahi
Anadolu
Diageo
Schincariol
Empresas Polar
Henan Jinxing
San Miguel
Suntory
Guangzhou Zhujiang
Oetker-Gruppe
2009
2008
2007
0
5,000
10,000
15,000
20,000
25,000
Volume (litres mn )
30,000
35,000
40,000
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Competitive Positioning
Kirin Holdings - Beer
© Euromonitor International
Consolidation Rush Amongst the Top Brewers
• All the current major brewers took part in the
•
•
•
•
•
consolidation, which has marked the beer industry for
over a decade.
Out of the top 10 brewers in 2000, only Modelo and
Heineken still had a place in the top 10 rankings in 2009
without a name change due to merger or acquisition.
In the emerging markets of Middle East and Africa, Asia
Pacific and Latin America, brewers have rushed to
capture volume growth there. In mature markets, the
consolidation took place in the value markets of North
America and Western Europe, with brewers looking to
balance their portfolios between value and volume
markets.
This has led to a dramatic increase in the volumes of the
top 10 brewers, which have captured an increasing
proportion of the global beer market since 2000.
This consolidation activity has left relatively little scope
for acquisitions in some major markets and has pushed
up the value of the independent breweries left.
The acquisition of FEMSA by Heineken will increase the
percentage of global volumes owned by the top 10
brewers by 190 basis points (based on 2009 volumes) to
61.8%. This is due to FEMSA being included in
Heineken‟s share and Kirin becoming a top 10 global
brewer.
Consolidation Within the Global Beer
Market:
% Volume Share
13.6%
Top Five
Next Five
Others
Inner ring: 2000
Middle ring: 2004
Outer ring: 2009 provisional
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Kirin Holdings - Beer
Competitive Positioning
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Japanese Brewers Look Internationally
• The declining and ageing Japanese population
shook the large Japanese brewers from their inward
focus to look abroad for new markets in the last
decade to combat the certain decline in Japan. The
favourite acquisition targets seem to be beverage
(both brewers and soft drinks) and food companies in
Asia Pacific and Australasia, with one large notable
exception of Suntory‟s acquisition of Orangina in
Europe.
• This is a much needed defensive move by the
Japanese companies, which had not participated in
the acquisition activity driven by the large Western
brewers since the end of the 20th Century. The
realisation that Japan is a market in decline with
heavy competitive activity and that acquisition targets
were being snapped up by Western companies
required them to act quickly and decisively. It is no
wonder that the majority of activity has been in Asia
Pacific and Australasia, due to the similar time zones
and trading links. The majority of Asia Pacific
excluding Japan offers growth prospects especially
China, and Australasia offers a cash cow as befits a
mature market.
Overview of Japanese Competitors Acquisitions
2006-2010
Company Target
Notes
Kirin
Lion Nathan
Acquires total control of
Australasian brewer
Kirin
San Miguel
Brewery
Acquires 49% of San Miguel
Brewery, which in turn
acquires international
breweries from parent
company
Kirin
National Foods
Acquires food company in
Australia
Suntory
Orangina
Acquires European rights and
production
Suntory
TipCo F&B
Acquires 50% stake in Thai
soft drinks company
Sapporo
Kronenbourg
Vietnam
Sapporo
Sleemans
Acquired control of Canadian
brewer
Tsingtao
Asahi acquires 19.9% stake in
second-ranked Chinese
brewer
Asahi
Acquires Kronenbourg
Vietnam from Carlsberg
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Kirin Holdings - Beer
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Strategic Evaluation
Competitive Positioning
Market Assessment
Category and Geographic Opportunities
Operations
Brand Strategy
Recommendations
21
Kirin Holdings - Beer
Market Assessment
© Euromonitor International
Strong Presence in Australasia and Asia Pacific
• Kirin has a strong presence in Asia Pacific and Australasia, but a small presence in other markets like North America
and Western Europe.
• Its presence in Asia Pacific particularly in Japan is mitigated by the sheer size of the Chinese beer market in volume,
where it is relatively small player.
• It has no major presence in the fast growing markets of Latin America and the Middle East and Africa.
Kirin Beer Regional Presence in 2009 and Growth Prospects
8
MEA
7
% CAGR 2009-2014
6
AP
5
4
3
AUS
LA
2
EE
1
NA
0
-1
0
10,000
20,000
WE
30,000
40,000
50,000
60,000
70,000
-2
Market size in 2009 (litres mn)
Bubble size indicates 2009 company volume share range: 4.1-41.1%
Black bubbles: Western Europe, Eastern Europe, Latin America, North America and Middle East and Africa indicate no or limited presence
(less than 0.1% regional market share).
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Kirin Holdings - Beer
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Strategic Evaluation
Competitive Positioning
Market Assessment
Category and Geographic Opportunities
Operations
Brand Strategy
Recommendations
23
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
Japanese Market in Long-Term Decline, Trading Down
Unusual beer duty system creates unusual market conditions, drives trading down
• In Japan, beer is taxed on malt content unlike most other nations. A heavy tax is applied to drinks containing malt
content of over 66.7%.
• This has led to the development by all the major brewers of low-malt (Happoshu) and non-malt beer (New Genre)
alternatives. Happoshu has a lower tax rate than full beer, and New Genre beer even lower than that.
• Happoshu and New Genre beers have both driven growth in the economy segment, with consumers trading down
due to the lower prices of these products. New Genre and Happoshu are mostly consumed at home, with consumers
preferring to trade up to standard and premium beers in the on-trade.
• Imports of cheap economy beer from Korea and other markets and the launch of private label beer by Japanese
retailers could threaten Kirin‟s and the other large Japanese brewers‟ current grip on the market.
Changing Face of Japanese Lager Market
2004-2009
Japanese Beer Market Overview 2009
8,000
% CAGR 2009-2014
Per Capita Consumption - litres
Off/On- trade split % volume
7,042.5
-0.5
55.2
82/18
7,000
Volume (litres mn)
Market Size - mn litres
6,000
5,000
4,000
3,000
2,000
1,000
0
Kirin - Volume Share (Rank)
34.5% (1)
2004
2005
2006
2007
2008
2009
Premium Lager
Standard Lager
Economy Lager
24
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
Fierce Competition in Japanese Market
Four main brewers do battle in a declining market
Declining Population and Key Beer
Demographic in Japan 2004-2014
• With the top four brewers accounting for 88% of beer
Japanese Major Brewers Market
Shares, 2009
Others
12%
Kirin
35%
140,000
Population („[000s)
volume sales, the Japanese market is very competitive.
• Recently, small local brewers akin to the craft brewers of
the US and the real ale brewers in the UK have sprang
up in Japan and started to capture market share from
the top four brewers with unique beers. The growth of
the small brewers is illustrated by the increase in share
for “Others”, up from 5% in 2000 to 11% in 2009. This
was after the Japanese government lowered the
minimum amount of beer needed to become a licensed
brewer from two million litres to 60,000 litres in 1994.
120,000
100,000
80,000
60,000
40,000
20,000
0
Population Aged 20-40
Population Aged 0-19, 41+
Long-term decline in beer due to population
trends
Suntory
11%
• The declining and ageing population in Japan is the
Sapporo
10%
Asahi
32%
main cause of the overall decline in beer in Japan, with
volumes expected to fall at a CAGR of nearly -1% over
the 2009-2014 period, equal to 160 million litres.
• Another factor is younger consumers moving away from
beer to RTDs. Volume sales of RTDs are predicted to
grow at a CAGR of 1% over the forecast period, but this
will only add 19 million litres.
25
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
Australia Looks Set for Steady Growth, Trading Up
Duopoly market being threatened
Major Brewers Volumes in Australia 20042014
• The beer market in Australia has traditionally been
% CAGR 2009-2014
Per Capita Consumption –
litres
2,000
1,500
1,000
500
0
2004 2005 2006 2007 2008 2009 2012 2014
Lion Nathan
Kirin
Fosters
Other
Total
Australia Beer Segment Breakdown 2004,
2009, 2014
Australia Beer Market Overview 2009
Market Size - mn litres
2,500
Volume (litres mn)
dominated by Foster‟s and Lion Nathan, which is
now owned by Kirin. This duopoly became
threatened recently by Pacific Beverages (a joint
venture between Coca-Cola Amatil and SABMiller),
which grew its share to 1.4% by 2009, focusing on
the premium segment.
• Woolworths, a leading retailer, has also
strengthened its portfolio of private label beers and
in 2009, it acquired a 25% stake in boutique brewer
Gage Road. Woolworths has a near 35% share of
grocery retailing in Australia and this could help
increase private label sales in this market.
1,875.9
1.9
10%
12%
17%
13%19% 25%
Premium Lager
89.7
Standard Lager
Off/On- trade split % volume
80/20
Kirin - Volume Share (Rank)
39.9% (2)
70%
69%
65%
Others
26
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
New Zealand Strong Premium Growth Forecast
Near duopoly market in New Zealand
New Zealand Beer Market Overview 2009
• The two largest brewers Kirin (Lion Nathan) and Asia
Market Size - mn litres
% CAGR 2009-2014
0.8
Per Capita Consumption – litres
73.8
Off/On- trade split % volume
71/29
Kirin - Volume Share (Rank)
47.9% (1)
New Zealand Beer Market Volumes by
Segment 2008-2014
350
Volume (litres mn)
300
Pacific Breweries DB Breweries, which is part owned by
Heineken accounted for almost 80% of beer volumes in
2009.
Domestic brands more popular
• The majority of beer volumes are accounted for by the
brewers‟ own labels, with licensed volumes playing only
a small part. Kirin distributes several A-B InBev, Diageo
and the Corona beer brands in New Zealand.
Strong Premium Growth
• Premium lager is expected to be the major driver of
beer growth in New Zealand over the 2009-2014 period.
In 2009, Kirin lead the segment with a 37% volume
share.
New competitor targeting premium segment
250
• Recent entrant Pacific Beverages has captured a 2%
200
volume share in the premium segment in just 20082009.
• Pacific Beverages is a 50/50 joint venture between
Coca-Cola Amatil and SABMiller in Australasia, and is
focused on the premium segment of beer and other
alcoholic beverages.
150
100
50
0
2008
2009
Others
Standard Lager
2010
2011
2012
Dark Beer
Premium Lager
2013
2014
Economy Lager
27
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
San Miguel in the Philippines
Standard lager dominates market
• Standard lager accounted for nearly 92% of beer volumes in the Philippines in 2009 and is predicted to be the fastest
growing segment over the 2009-2014 period.
• The imported lager segment is tiny, making up less than 0.1% in 2009.
• Premium lager is also a very small segment of the market, accounting for less than 4% of total beer volumes. This
segment is mostly targeted at the more affluent consumers and is out of the reach for most consumers.
• San Miguel dominates the beer market with its namesake brand and its variants, but also has several other brands
like Gold Eagle, Red Horse and Cerveza Negra supporting its core brand.
Philippines Beer Market Major Brewers
2009
Philippine Beer Market Overview 2009
Market Size - mn litres
% CAGR 2009-2014
Per Capita Consumption – litres
Off/On- trade split % volume
San Miguel* Volume Share (Rank)
Notes: * Kirin owns a 48% stake in San Miguel
San Miguel Corporation maintains control
1,598.0
4.1
17.4
SABMiller ,
5.7
Others, 1.3
Asia
Brewery,
5.8
73/27
87.2% (1)
San
Miguel,
87.2
28
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
Philippines Set for Growth
Several growth factors exist in the Philippines
Philippine Population Growth19992020
• The per capita consumption of 17.4 litres in 2009 is
•
•
•
120
Population million
100
80
60
40
20
0
1999
2004
2009
Population over 18
2014
2020
Population under 18
San Miguel in Philippine Beer Market,
Volume 2004-2014
2,000
Volume (litres mn)
•
slightly above the Asia Pacific market average of 16 litres.
However it is below China (32.3), Taiwan (20), Vietnam
(18.5) and the world average at 27 litres illustrating the
market still has potential to grow.
Beer is relatively unaffordable but is becoming less so in
the Philippines, with the average daily disposable income
to beer unit price ratio of 1.9 litres a day in 2009 up from
1.8 litres in 2004.With disposable incomes expected to
rise, beer could become more affordable to more of the
population. Planned infrastructure projects particularly in
transport, power and telecommunications could also
potentially lower distribution and production costs in the
future. A planned excise increase in 2011 of 8% should
mitigate some of the increase by rising unit prices.
With a young population, the number of potential
consumers is also set to increase. In 2009, almost 60%
of the population were over the legal drinking age of 18;
this is set to increase to 62% by 2014 and 64% by 2020.
These factors combined show that the potential for beer
and alcoholic drinks in general in the Philippines is great.
With San Miguel Brewery having a near monopoly of the
beer market it (and Kirin having a stake in the company, it
too) is in a very good position to benefit from growth in
beer in the country.
1,500
1,000
500
0
San Miguel Brewery
Others
San Miguel Corp
Forecast Volumes
29
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
San Miguel International Adds More Asia Pacific Options
• The acquisition of San Miguel Brewery International from its parent company by San Miguel Brewery increases its
exposure to markets outside the Philippines. There are opportunities to strengthen its operations further by
acquisition or investment in these markets particularly Vietnam and Thailand.
• The Thai beer market is dominated by the local companies Boon Rawd and Thai Beverage, with a combined share
of 87% in 2009. Volume sales of beer are expected to decline over the 2009-2014 period, due to the recent uncertain
political and economic climate, which has hit tourism. The market dynamics, however, still exist for beer to grow in
the longer term, with low per capita consumption and a relatively young and growing population. Thai Beverages fell
further behind Boon Rawd, as its volumes declined in 2008 and in 2009, so could be seen as an acquisition target.
• Vietnam has a high CAGR of over 7% predicted for beer, driven by a rising middle class, low per capita consumption,
a relatively young and growing population and increased tourism. Vietnam has attracted several large brewers,
including Carlsberg, SABMiller, Heineken and Sapporo, due to the growth opportunities for beer. SABECO is the
leading brewer in Vietnam and could be seen as an opportunity to expand in the Vietnamese market through
acquisition or an equity holding.
Beer Market Overview: San Miguel International
Hong Kong
China
Vietnam
Indonesia
Thailand
165.2
43,001.8
1,623.6
233.9
1,939.4
% CAGR 2009-2014
-0.1
7.3
7.2
1.8
-0.8
Per Capita Consumption – litres 2009
23.4
32.3
18.5
1.0
30.0
47/53
68/32
28/72
40/60
65/35
35.4
0.2
31.7
0.5
Market Size – litres mn, 2009
Off/On- trade split % volume 2009
San Miguel % Volume Share (Rank)
2009
3.0
30
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
Chinese Beer Market Expands, but Kirin is a Small Player
Chinese beer boom set to continue
Chinese Beer Market, Volume 20042014
• The boom in the Chinese beer market seen over the last
70,000
Volume (litres mn)
decade is set to continue. China will extend its lead as
the world‟s largest beer market.
• The greatest growth is expected in economy lager,
meaning that economies of scale in production and
distribution are key to survival in the Chinese market.
• The quality of infrastructure and the sheer size of the
country are also key to gaining volumes in the Chinese
market, meaning that production has to be relatively close
to consumption. This is heightened because of Chinese
consumers‟ preference for fresh beer.
60,000
50,000
40,000
30,000
20,000
10,000
0
Chinese Beer Market Overview 2009
Leading Chinese Brewers 2009
Market Size - mn litres
% CAGR 2009-2014
Per Capita Consumption
Off/On- trade split % volume
Kirin - Volume Share (Rank)*
43,001.8
7.3
China
Resources
19%
Others
38%
32.3
Tsingtao
13%
68/32
0.1% (17)
Note: * Kirin also owns several stakes in brewers in the country
including Miguel, Dalian Daxue Brewery and Hangzhou
Qiandaohu.
Chongqing
3%
Guangzho
u Zhujiang
3%
A-B InBev
10%
Henan
Jinxing
4%
Beijing
Jinxing
10%
31
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
China: Economy Beer Dominates, But Trading Up Apparent
Economy beer dominates in China
• The growth in the Chinese beer market is dominated by economy beer, which are low margin but high volume and
normally purchased in the off-trade. Volume sales of economy beer grew at a CAGR of 9% over the 2004-2009
period and is still expected to grow further, at a CAGR of 7% over the 2009-2014 period.
• Economy beer in China is likely to drive global volumes, and is set to account for 49% of global beer absolute growth
over the forecast period. The Chinese beer market as a whole is predicted to account for 58% of total beer growth.
Trading up to standard and premium beer brands
• In the review (2004-2009) and forecast periods (2009-2014) trading up to standard and premium brands was and will
be apparent, as both segments increase their share of beer sales in China. Standard and premium beers combined
accounted for 9% of total beer sales in 2004, 11% in 2009 and a predicted 12% by 2014. The growth in premium
lager will move China up from sixth in the global rankings in premium lager in 2009, to fifth by 2014.
• Dark beer and stout beer have little penetration in China. Low/non- alcohol beer has minor sales, which are expected
to grow at a CAGR of 10% over the 2009-2014 period, to account for around 0.1% of total beer volumes in 2009.
Chinese Beer Market by Segment 2004-2014
Volume (litres mn)
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
2004
2005
2006
2007
Premium Lager
2008
2009
Standard Lager
2010
2011
2012
2013
2014
Economy Lager
32
Kirin Holdings - Beer
Category and Geographic Opportunities
© Euromonitor International
China Could be a Key Market for Kirin
Relatively small but increasing presence in China
Asahi takes a stake in Tsingtao
• Kirin's presence increased in China through its equity
• In comparison to Kirin, its nearest Japanese competitor
stakes in San Miguel Breweries but this added only a
Asahi acquired a 19.9% stake in the second largest
few production assets. It has in addition to this its own
Chinese brewer Tsingtao in 2009 and has sought to
and other equity holdings present in the Chinese market.
increase economies of scale in its own business.
• The main issue with Kirin‟s holdings in China is the
• This stake gave Asahi large exposure to the Chinese
geographical disparity between it and its equity partners‟
beer market through a brewer with established
production locations and its relatively small scale. This
production, distribution and marketing.
could hold back its progress in China until it can no
• Kirin announced in 2009 that is was to look at synergies
longer viably operate in the market especially against
between its existing Chinese business and Tsingtao,
larger players like Tsingtao and China Resources.
including the licensed production of Tsingtao in its
facilities.
Kirin runs the risk of losing out in China
• Gain scale through acquisition: this could mean several small acquisitions, due to the high equity stakes in top
Chinese brewers held by other major brewers. Alternatively, Kirin could look to acquire one large acquisition of the
last remaining independent brewers like Henan Jinxing. Purchasing equity stakes in China is expensive, as Asahi‟s
recent acquisition of an equity stake in Tsingtao illustrates, with every 1% share of the Chinese beer market costing
around US$250.8 million.
• Partner: partner with other brewers to purchase raw materials to lower costs. Included in this, could be a joint
venture, with a large brewer like Carlsberg, Suntory, Asia Pacific Breweries or one or several local Chinese players,
to look to acquire/develop new Chinese regional markets to increase presence.
• Look to exit market: this should be a last resort as the Chinese market offers strong growth potential, but if Kirin
cannot gain scale, pulling out and spend its resources elsewhere could be more lucrative.
33
Kirin Holdings - Beer
© Euromonitor International
Strategic Evaluation
Competitive Positioning
Market Assessment
Category and Geographic Opportunities
Operations
Brand Strategy
Recommendations
34
Kirin Holdings - Beer
Operations
© Euromonitor International
Expands International, Contracts Japanese Production
Number and Type of Kirin Production Facilities
• In 2009, Kirin announced that it was closing two
breweries in Japan, in order „to rectify the discrepancy
between sales and production capacities‟. The decline in
beer consumption in Japan is responsible for this, and
Brewery
New Zealand
4
other Japanese brewers may follow suit and close underused and older production facilities.
Brewery
Australia
5
• In Japan, Kirin Brewery operates seven regional sales
Brewery
Japan
* 11
and marketing divisions, 44 regional head offices, 16
sales branches, and three research institutions.
Brewery
China
** 2
• Kirin directly holds a 25% equity stakes in two Chinese
brewers each with one brewery. Increasing its stakes in
Spirit‟s
USA
1
these companies maybe an option; alternatively, it could
Spirit‟s and RTDs
Australia
1
look to form an alliance with San Miguel Breweries
Chinese operations to extend its reach in China.
Spirit‟s and RTDs
Japan
***2
• Kirin has increased its 49% stake in San Miguel Brewery
which has operations in several Asian Pacific markets:
Spirit‟s and RTDs
New Zealand
1
• Philippines
Wineries
USA
1
• China (2 breweries, one in the South and the other In
the North)
Wineries
New Zealand
1
• Hong Kong
Wineries
Australia
6
• Thailand
Notes: * Kirin has announced it is closing its Tochigi and
• Vietnam
Hokuriku breweries in Japan in 2010, thus reducing its number of
• Indonesia
breweries in the country to 9.
Type
Country
Number
* * Kirin owns or holds several equity stakes in Chinese brewers
either directly or through San Miguel.
* * * Owns two distilleries in Japan but one has ceased
production and been mothballed.
35
Kirin Holdings - Beer
Operations
© Euromonitor International
Exports and Licensing for Growth
Looks to license brands for growth
• Kirin has sought to partially mitigate its lack of presence
Kirin also operates licensed brands in own
markets
in regions where it does not operate through licensing its • Kirin also holds several licences for other brewers‟
brands to other brewers. Licensed volumes in these
brands in several of the markets it operates in. These
markets tend to be small but could develop over time.
brands give its own portfolio increased depth,
particularly with well-known international brands.
Country
United Kingdom
Russia
USA
Licence
Holder
Wells &
Young's
Brand
Kirin Ichiban
Heineken
Kirin Ichiban
A-B InBev
Kirin Ichiban,
Kirin Light
Country
Brand
Owner
Brand
Japan
Heineken
Heineken
Japan
Diageo
Guinness, Kilkenny,
Smirnoff Ice
Japan
A-B InBev
Kirin Ichiban, Kirin Light
Australia
Heineken
Heineken, Amstel
Australia
A-B InBev
Staroprahmen,
Budweiser, Beck‟s
New Zealand
Modelo
Corona Extra
New Zealand
A-B InBev
Beck‟s, Stella Artois,
Oranjeboom,
Boddington‟s, Bass,
Leffe, Belle-Vue,
Hoegarrden
New Zealand
Diageo
Guinness, Kilkenny
36
Kirin Holdings - Beer
© Euromonitor International
Strategic Evaluation
Competitive Positioning
Market Assessment
Category and Geographic Opportunities
Operations
Brand Strategy
Recommendations
37
Kirin Holdings - Beer
Brand Strategy
© Euromonitor International
International and Domestic Focus of Brands
International appeal
Tough Japanese market driven by innovation
• Kirin has looked to increase its international presence
• In Kirin‟s domestic market, new product development
with licensed production and marketing with local
partners. Local production and using local partners
allows Kirin to benefit in several ways:
• Cheaper costs than importing the product from Japan
especially in European and US markets.
• Gains access to a local partner‟s distribution network
without having to maintain it own operations.
• Gains local market knowledge from partner.
• In the UK, for example, the brand Kirin Inchiban is
licensed to local partner, the brewer Wells & Young‟s.
The brand is marketed as a high-end premium beer and
its marketing and outlets reflect this.
• It is also aligned with Asian consumer foodservice
outlets linking its Japanese heritage.
• A certain amount of localisation of the brand took place,
with a draft version as well as bottles being made
available due to the high proportion of on-trade sales in
the UK market.
•
•
•
•
drove volume development. This did help to steal share
and drive new category sales, but also saw some
cannibalisation.
Innovation is incredibly important in the Japanese
market, with several variants spanning all three types of
beer lager, happoshu and new genre (no malt beer)
Japan and low- and non-alcohol beers.
Packaging type and size is also important to product
development to try and gain an edge over competitors in
a fiercely competitive market. This has also included
Kirin releasing limited edition versions of previous
heritage branding on its current product range.
Seasonal variants based on spring, summer, autumn
and winter are also available during the year.
Kirin has recently changed to more premium ingredients
for its core brands in Japan such as Kirin Ichiban
Shibori. The company has promoted this move and kept
the price at the same level to increase interest in the
brand in what can be a price-sensitive market.
38
Kirin Holdings - Beer
© Euromonitor International
Strategic Evaluation
Competitive Positioning
Market Assessment
Category and Geographic Opportunities
Operations
Brand Strategy
Recommendations
39
Recommendations
Kirin Holdings - Beer
© Euromonitor International
Look for International Growth to Offset Domestic Decline
Increasing stake in San Miguel Brewery
Look to China for long-term growth
• Kirin could look to deepen its international exposure
• Kirin‟s position in China is relatively weak compared to
through taking control of San Miguel Brewery if the
majority owner San Miguel Corporation allows this. San
Miguel Corporation has stated in early 2010 that its
stake in the brewing business is not for sale. But as San
Miguel Corporation looks to move away from fmcg into
heavy industry and infrastructure it may look to divest its
stake to raise capital for new ventures or acquisitions in
the medium to long term.
its major rivals. There are limited opportunities to make
a large acquisition in China unless a competitor looks to
divest its holdings, which seems unlikely.
• If an opportunity arises to acquire, buy an equity stake
or partner with a large Chinese brewer, Kirin should
seriously consider the prospect to take advantage of
growth in the market.
• The company could also look at acquiring smaller
Chinese brewers to bolster its presence.
Look to other Asia Pacific markets for growth
Acquisitions for beer face internal hurdles
• China dominates the region‟s and the world‟s beer
• Kirin‟s operations in other categories of alcoholic drinks,
volume growth, but other markets in Asia Pacific offer
growth opportunities.
• Kirin should look to strengthen its prospects in markets
like Vietnam, Thailand and others. The company could
do this through acquisitions or through its equity holding
in San Miguel Brewery.
non-alcoholic drinks, packaged food and other
categories place constraints on the amount of finance
available for expansion. Acquisitions may provide a
higher return on investment than those in beer.
• Every acquisition opportunity should be looked at for the
value it offers Kirin as a group to meet the targets set by
the management in its long-term strategy.
40
Kirin Holdings - Beer
© Euromonitor International
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