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Kirin Plans $4.3 Million Joint Venture Takeover of Mandalay Brewery
Japanese beer giant Kirin plans to purchase 51 percent of the Mandalay Brewery for around $4.3 million, a move which would consolidate its position in the Myanmar beer market, according to a senior executive of Myanmar Brewery Limited.
The purchase would see the brewer take control of Myanmar's oldest brewery through a new joint venture with its current owners, the military-owned Myanmar Economic Holdings Limited (MEHL), Hiroshi Fujikawa, vice chairman of Myanmar Brewery Limited, told Myanmar Business Today.
“We're trying to set up a joint venture... make a new company with MEHL, it's not an acquisition,” said Fujikawa. “We've just submitted an application to the Myanmar Investment Commission so we don't know yet when the date of incorporation would be,”
If the purchase gets approved, Kirin would hold a majority stake in 90 percent of Myanmar's legal beer market, but, Fujikawa estimates, illegally brewed beer accounts for up to 20 percent of the total market in Myanmar, which puts Kirin's actual market share far lower, he said.
In 2015, Kirin asserted its dominance over other recent international entrants to Myanmar's beer market, Denmark's Carlsberg and the Netherlands's Heineken, when it purchased a majority stake in Myanmar's biggest brewer, Myanmar Brewery Limited.
The $560 million stake in the Myanmar Brewery which produces Myanmar Beer, put Kirin in control of an 80 percent share of the local market.
Just like the ubiquitous Myanmar brew, albeit less popular, Kirin plans to continue producing Mandalay Beer in order to maintain Kirin's “close relationship and good chemistry” with the Myanmar people, said Fujikawa.
“We all understand the competition in the beer industry here in Myanmar is becoming more and more tough and fierce because of the new comers. So we're happy to support the Mandalay brand and keep it in the market,” he added.
Considering the relatively small size of the investment and Mandalay Brewery's small market share, Kirin hasn't made a short term outlook on possible returns, but remains “optimistic”. Kirin plans to operate the two brewery's independently of each other but a merger between the two remains “a possible option” depending on time and regulations, he said.
In 2014 Myanmar consumed 210,000 kilolitres of beer, about one tenth per-capita of its regional neighbors Thailand and Vietnam. However, Kirin eyes Myanmar as a market with much potential in the wake of falling sales in Japan, and the imminent sale of Kirin's failing Brazilian breweries, acquired for $3.4 billion in2011, to rival beer maker Heineken.
“Japan is declining, the market is shrinking, so it's important for Kirin group to have an emerging, high growth market,” said Fujikawa.
Source: Myanmar Business Today
