North America: Kirin looking to buy facilities in North America to maintain strong growth in craft beer market

Kirin Holdings, Japan's second-largest brewer by sales, is looking to buy factory facilities in North America to maintain strong growth in the region's craft beer market, its chief executive said.

Kirin has seen sales volumes in the North American craft beer market climb by double-digit percentage figures since completing its acquisition of Colorado-based New Belgium Brewing in 2020 and Bell's Brewery in Michigan in 2021, Reuters reported on December 21.

"Our craft beer business in North America is on a roll," CEO Yoshinori Isozaki said in an interview with Reuters on December 20.

North American craft beer has the highest growth rate among global businesses that span everything from whisky to probiotic health drinks, he added, without disclosing profit margins.

New Belgium is known for its Fat Tire ale while the Two Hearted Ale brand by Bell's was named the best beer in America by the American Homebrewers Association. Their merger in 2021 combined two of the top 10 craft makers in the United States.

Kirin had craft beer sales of about 60 billion yen ($454 million) in 2021, accounting for 3% of global sales. The company expects that to grow to 5% this year.

Production and distribution across such a wide geographic market as North America remains a challenge, however, and Kirin is considering buying facilities from other craft brewers that are in the doldrums and have excess capacity, said Isozaki, who has held the top job at Kirin since 2015.

Competitors Asahi Group Holdings Ltd and Suntory Holdings are also looking to expand their footprint in North America as Japan's beer market continues to contract due to an ageing population and as young people drink less alcohol.

Kirin established a stronghold in Australia with its purchase of brewer Lion Nathan in 2009, and the Lion subsidiary now runs the conglomerate's global craft beer operations.

The company is also looking to expand in other parts of Asia and to grow its health supplements business in North America, Isozaki said.

In Japan, where soaring energy costs and a weaker yen have led to decades-high inflation, Kirin raised canned beer prices in October for the first time since 2008. It has also hiked prices on imported wines and spirits.

If the Ukraine crisis and its impact on costs continues, Kirin may have to raise prices again next year, Isozaki said. He added that the company is preparing to raise wages, a key push by Prime Minister Fumio Kishida, without elaborating on the size of a potential increase.

"In terms of employees, I believe we have to think about raising wages just to account for the soaring costs of goods and services."

21 December, 2022