Kirin eyes 'aggressive' growth in S-E Asia

TOKYO • Kirin Holdings wants to be more aggressive in buying South- east Asian companies after the sale of its stake in Singapore- based conglomerate Fraser & Neave (F&N) stunted its growth in the region.

"It has been frustrating especially since we sold our shares in F&N," Mr Hiroshi Fujikawa, Kirin's managing director for the region, said in an interview. "We'll keep watching the market opportunities and maybe, sometimes, we have to do it aggressively or pro-actively."

Kirin last month acquired a controlling stake in Myanmar's biggest brewer for US$560 million (S$795 million), as it seeks to boost sales from developing markets to help offset falling beer consumption in Japan.

The Tokyo-based brewer had bowed out of a bidding war for F&N in 2013, selling its 15 per cent stake in the conglomerate.

Japan's second-largest listed brewer lost out on the opportunity to use F&N to expand in South-east Asia and it will move faster once a suitable target has been identified, the Singapore-based Kirin executive said. He sees Indonesia, Vietnam and Thailand as the company's top potential markets in the region because of the large size of their populations.

Kirin shares ended 4.7 per cent higher at 1,692 yen (S$20) by the close of trading in Tokyo, its largest gain in more than two years. 

Japan's largest listed brewer Asahi Group Holdings rose 5.4 per cent, while third-place Sapporo Holdings jumped 6.8 per cent.

The benchmark Topix index spiked 6.4 per cent amid a wider rally in global stocks.

For now, acquisition opportunities in the region are limited as family owners of potential targets have not been willing to cede majority control, said Mr Fujikawa, a 30-year Kirin veteran who has been based in Singapore since 2010. Asking prices are also too high, he added.

"If they would want to sell their businesses at the highest price, I'm not going to be interested," he said. "If they would like to grow their brand or businesses in their own market, I'm happy to talk and discuss investment opportunities."

Making acquisitions would be one way to break into the South-east Asian market, said Ms Carmen Lee, head of research at OCBC Bank.

"It's very tough to compete against the incumbents in the region because of the intense competition," she said. "Beer business is all about the network and distribution, which is the key thing."

Kirin's Myanmar deal announced on Aug 19 was its largest in South-east Asia since it paid $1.34 billion for the F&N stake in 2010 and invested US$1.5 billion in Philippines' San Miguel Brewery in 2009. The Japanese company grabbed the stake in Myanmar Brewery less than two weeks after F&N had to sell the same stake following a two-year long dispute with its local partner.

Beer sales in Myanmar rose 14 per cent to US$265 million between 2009 and 2013, and are forecast to hit US$675 million by 2018 as its middle class grows, according to researcher Euromonitor.

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A version of this article appeared in the print edition of The Straits Times on September 10, 2015, with the headline 'Kirin eyes 'aggressive' growth in S-E Asia'. Print Edition | Subscribe