Japan & USA: Sapporo Holdings planning a brewery in the US

Sapporo Holdings Ltd. is planning to set up a brewery in the U.S. by the end of 2024, as the top-selling Japanese beer in the American market seeks to expand its market share and cut costs, Bloomberg reported on March 11.

“I would like to have a production base on the West Coast,” Hiroyuki Nose, Sapporo Breweries’ vice president of marketing, said in an interview. “We make and import most of it from Canada and there are logistical costs. This is a challenge for us.”

The Tokyo-based beverage maker hasn’t been able to scale up beer brewing in North America - its largest overseas market, according to Nose, who’s set to become president of alcoholics drinks business Sapporo Breweries at the end of March. Sapporo may also look at acquiring a brewery or expanding its contract manufacturing in the U.S. as part of the efforts, he said, declining to share more details such as investment or the brewing capacity being planned.

Presence on American soil will not only save transportation costs for Sapporo but also allow it to better penetrate what the Brewers Association, a craft-beer trade group, says is a $116 billion U.S. beer market. The company predicts sales volume of its Sapporo Premium beer to increase 20% this year in North America as demand recovers from the Covid-19 pandemic.

Although it lags rivals in its home market - it’s the fourth-largest beer maker in Japan - Sapporo got an early start in the U.S., to which it began exporting in 1964, and has over time become a popular offering at restaurants.

Sapporo also owns California-based craft beermaker Anchor Brewing, which it purchased in 2017. A small amount of its Sapporo Premium beer sold in the U.S. is currently brewed through contract manufacturing, and the rest is imported from Canada and Vietnam.

The North American market contributed about a fifth of the company’s alcoholic beverage sales of 285.4 billion yen ($2.6 billion) last year. About 70% of its overseas beer brand, Sapporo Premium, was sold in the U.S. and Canada.

Beer makers around the globe have been hit hard by the pandemic, as the virus upended how consumers dine out and drink. That has meant beer and alcohol sales to restaurants dropped off, while canned drinks sold through retail channels did well.

While Sapporo’s alcohol sales fell 13.6% in 2020, the North America unit’s sales decrease of 5.3% was much smaller by comparison and the segment’s profit also grew. The fall was stemmed partially by a larger contribution from store sales, as more drinkers shopped for home consumption. Sales actually grew in Canada, where about 90% of its beer sales are through retail channels, Nose said.

10 March, 2021