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Japan's Kirin Brewery Co Ltd defied stagnant beer demand at home to post a 41%rise in group net profit in 2002 and predicted better results ahead, aided by strong sales of fruit-flavoured drinks and lower marketing costs, according to Reuters.

Japan's number-two beer maker offset a declining thirst for beer at home with its line-up of non-beer alternatives, including "chuhai", a cocktail made with soda water, and also profited from acquisitions made in Asia. "The alcohol market is saturated, so we need to find pockets of growth," said Yoshikazu Arai, managing director at Kirin.

Kirin forecast a further rise in 2003 to 39.00 billion yen on sales of 1.67 trillion yen. Kirin also said it would seek shareholder approval to buy back up to 20 billion yen of its own shares, or about two percent of shares outstanding. The brewer named after a mythical Japanese winged horse has cut operating costs faster and deeper than domestic rivals to counter price competition.

Japan's biggest brewer, Asahi Breweries Ltd 2502.T, and number-three Sapporo Breweries 2501.T are due to report full-year results on Friday. They've diversified well by expanding chuhai sales," said Muneyuki Tsuji, fund manager at Japan Investment Trust Management.

Slowing demand for happoshu, which may be exacerbated by a tax rise on the brew in May, prompted Kirin to push into the chuhai market. With the domestic market depressed by deflation and weak consumer spending, Japanese brewers are focusing their efforts on expanding into China, the world's second-largest beer market.

The factories and distribution channels of its affiliated companies, Australian brewer Lion Nathan Ltd and Philippine food and beverage group San Miguel Corp will aid Kirin’s push into China.

China's top brewer accepted a $182 million investment from the world's largest brewer Anheuser-Busch Cos Inc to raise its holding in Tsingtao to 27%by 2010 from the current 4.5% stake.


19 February, 2003