E-Malt.com News article: 4534

South Korea: Japan’s leading beer companies are joining a bid to take over Korea’s largest soju or traditional Korean liquor maker Jinro. Asahi Breweries with a 38.4 % share of the Japanese beer market has agreed to form a conso rtium with Korea’s Lotte Chilsung, and Kirin Brewery with a 36.2 % share of the Japanese beer market with CJ Group, according to a report published by The Chosun Ilbo & Digital Chosun Ilbo on March 27.

Industry experts say that with Japan’s beer market going stale, the country's beer makers aim to secure a bridgehead to enter the Korean market by buying Jinro. In addition, they seem to believe that the acquisition would give them a prime stake in the Japanese as well as the Korean soju market because they can take over Jinro Japan too. "They see this as killing two birds with one stone," one said.

Japanese beer production shrank from 7.18 million kiloliters in 2001 to 6.53 million kiloliters in 2003, prompting brewers to eye overseas markets including Korea and China. The Korean beer market is led by Hite and Oriental Brewery (OB), with imported beer accounting for less than 1 percent in a market worth an estimated W3.3 trillion (US$3.3 billion).

Overseas beer companies find it difficult to penetrate the distribution network in Korea, and acquisition of Jinro would be a considerable help. Jinro has a 55 percent share in the Korean soju market and a 92 percent market share in Seoul and metropolitan area.

“Since Asahi and Kirin’s marketing strategies are more developed than those of Korean companies, their takeover of Jinro will be a burden on us," OB official Chung Yong-min said. Asahi made inroads into the Korean market by acquiring a 21 percent share in Haitai Beverage last year. It has also taken over Chinese beer and beverage companies.

But Asahi and Kirin also want Jinro because Jinro Japan has taken first place in the Japanese soju market for seven years, beating its 30 Japanese rivals. Asahi chairman Shigeo Fukuchi recently said buying Jinro was far easier than establishing a new brand and he would not miss the chance to take over the Korean soju maker. Kirin, which is second to Asahi by a margin of only 2 percent in the beer market, expects to race ahead if it secures Jinro Japan.

Experts say that capital-rich Japanese bidders have the advantage over Korean rivals. But some Koreans are worried that foreign companies could control the soju as well as the beer market.


30 March, 2005