Bowmore Distillery Parent in Japanese Drinks Merger talks

> Kirin, Suntory discuss merging into global giant
>
> THE ASAHI SHIMBUN
>
> 2009/7/14
>
> Kirin Holdings Co. and Suntory Holdings Ltd. are negotiating a
> merger that
> would create one of the world's largest beverage companies, with sales
> surpassing those of even Coca-Cola Co., sources said Monday.
> The deal, the first merger of Japanese brewers in more than a
> century, would
> also produce the world's largest beer maker, a title currently held by
> Anheuser-Busch InBev.
> Kirin and Suntory, Japan's two largest food and beverage makers,
> have yet to
> finalize the form, conditions and timing of the merger. They have
> already
> been cooperating in the distribution of soft drinks in some areas.
> According to sources in Kirin and Suntory, the presidents of the two
> companies have set up a team to discuss further tie-ups, including a
> possible merger. The companies are also trying to ensure the merger
> does not
> violate the Anti-Monopoly Law.
> Through the merger, the two companies plan to solidify their profit
> base in
> the shrinking domestic beverage market and establish themselves
> overseas.
> With combined consolidated sales of 3.82 trillion yen in 2008, the
> merged
> company would dwarf Asahi Breweries Ltd., currently No. 3 in the food
> sector. It would also hold a 50-percent stake in the domestic beer
> market.
> In postwar Japan, four companies--Kirin, Asahi, Suntory and Sapporo
> Breweries Ltd.--have dominated the beer market.
> In the first half of 2009, Kirin's share in Japan's beer and related
> market
> was 37.4 percent, followed by Asahi's 36.8 percent, Suntory's 12.7
> percent
> and Sapporo's 12 percent.
> With Kirin's "third-beer" products, made with malt substitutes, and
> Suntory's premium beer selling well, both companies increased their
> operating profits in 2008 despite the recession.
> However, Japan's beer industry faces serious problems, such as the
> country's
> aging population and the lower beer consumption among younger
> generations.
> In recent years, both Kirin and Suntory have been buying into
> beverage and
> food makers in Asia and Oceania to seek further growth abroad.
> Kirin bought stakes in a beer subsidiary of San Miguel Corp., a major
> Philippine food maker, in April and May.
> It also agreed to turn Australian beer brewer Lion Nathan Ltd. into
> a wholly
> owned subsidiary in April.
> Kirin bought Australian dairy and beverage producer National Foods
> Ltd. in
> 2007.
> In October, Suntory announced it would buy major New Zealand
> beverage maker
> Frucor Beverages Group Ltd.
> Suntory President Nobutada Saji has indicated that the company is
> willing to
> invest in other foreign companies in the field of beverages and
> health food
> in 2009.
> Based on sales in fiscal 2008, the Kirin-Suntory alliance would rank
> fifth
> in the global food industry after Nestle Co. of Switzerland, British-
> Dutch
> conglomerate Unilever, and U.S. giants PepsiCo Inc. and Kraft Foods
> Inc.
> Nestle reported about 9.38 trillion yen in sales and Unilever about
> 5.24
> trillion yen.
> Still, Kirin and Suntory lag far behind overseas rivals in
> profitability.
> Group operating profits accounted for only about 5 to 6 percent of
> their
> consolidated sales in 2008, compared with Coca-Cola's 26 percent and
> Unilever's 17 percent.
> Kirin Holdings, whose corporate history dates back to 1907, operates a
> number of companies, including Kirin Brewery Co., wine maker Mercian
> Corp.
> and Kirin Beverage Co.
> With a work force of 37,000, Kirin reported consolidated sales of
> 2.3035
> trillion yen and consolidated operating profits of 145.9 billion yen
> in
> 2008.
> Suntory Holdings, which started as a store that opened in 1899,
> holds the
> top share in Japan's whiskey market. It is also No. 2 in the soft
> drink
> market and No. 3 in the beer market.
> Suntory employs 22,000 people and had consolidated sales of 1.5129
> trillion
> yen and consolidated operating profits of 81.3 billion yen last
> year.(IHT/Asahi: July 14,2009)
>