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Myanmar: Kirin Holdings wants to lead rivals in Myanmar
Brewery news

With beer consumption shrinking in China and other major markets, Southeast Asia has become a key growth target for the beer industry.

In 2015, Japan's Kirin Holdings seized the chance to acquire Myanmar Brewery, which holds an 80% share of the country's market.

Hajime Kobayashi, deputy director of the brewer's corporate strategy, recently told The Nikkei Asian Review about the attraction of the Southeast Asian market and how Kirin plans to cope with the competition.

Q: How did Kirin tap into Myanmar?

A: We initially took an interest in the soft drink business in Southeast Asia and acquired a 15% stake in Singaporean beverage giant Fraser and Neave in 2010.

However, when Fraser and Neave was taken under the umbrella of its rival Thai Beverage in 2013, we decided to unload our stakes and acquire a 55% stake in Myanmar Brewery.

Q: Was Kirin interested in the Myanmar beer market from the outset?

A: We have wanted to be the No. 1 brewery in Asia and Oceania since the time former President Kazuyasu Kato was at the helm. Asia is also an important market for the group's portfolio, given its proximity to Japan and growth potential.

We have acquired stakes in San Miguel Brewery, the Philippine's largest brewery, and Lion in Australia. Myanmar Brewery came up for sale just when we were looking for an opportunity to tap the market.

Q: Brasil Kirin, which you acquired in 2011, has posted mediocre results. What do you make of this?

A: At the time, we invested in Brazil in the belief it was a good investment in a fast-growing country, but we have taken a reactive approach. We acquired Myanmar Brewery so as not to repeat the mistake as in Brazil.

We have seen lifestyles and regulations changing in Myanmar. We want to lead our rivals there.

Q: What is the situation like in Myanmar's beer market?

A: In Myanmar, beer is still mostly drunk at city restaurants. With Western economic sanctions being lifted after democratization, however, future economic growth can be expected.

With a large, young population, the country's beer market has grown at an annualized rate of more than 10% and Myanmar Brewery's operations are expanding as well.

Many women in Myanmar used to feel hesitant about drinking alcohol for religious reasons, but that is gradually changing, too.

Furthermore, beer is currently popular in urban areas like Yangon, the country's largest city, but demand is likely to expand in rural areas. We want to pitch our products using [Myanmar Brewery's] name recognition and sales network as a top brewery with an 80% market share.

Q: Western rivals, such as Dutch giant Heineken and Danish Carlsberg, are also expanding into Myanmar. How do you plan to compete?

A: Western rivals are going on the offensive, but their market shares are still only a few percent. Their strategy is to pitch well-known premium beer brands to upscale restaurants in Yangon and other big cities.

We plan to tap the country's growing middle class by adding Myanmar Beer Premium and Japan's Ichiban Shibori to our Myanmar Beer.

Illegally imported beers are, in some ways, a bigger threat than European brands. Well-known brands, such as Singha and Chang, are being illegally imported from neighboring Thailand. They are also cheaper as they carry no liquor tax or duties.

As Thai beer brands are popular among Myanmar people who have worked in Thailand, illegally imported beers account for about 20% of the country's beer market. We are calling on the government to take measures with our competitors.

25 November, 2016
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