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Business deals

Kirin to buy stake in Indian craft beer maker Bira 91

Deal will be first in country for Japanese group shifting foreign M&A strategy

Products from Be Nine Beverages: Japan's Kirin HD will take a small stake in the emerging craft brewer in India.

NEW DELHI/TOKYO (Financial Times) -- Kirin has agreed to buy a stake in Indian brewer Bira 91 as it looks to improve on a patchy record of overseas deals with its latest bet on the $90bn global craft beer industry.

The Japanese brewer will invest about $30m for a high single-digit percentage stake in craft beer maker Bira, according to people with direct knowledge of the talks. The deal will be Kirin's first big bet on premium beer in India.

Kirin's recent focus on craft breweries reflects the group's effort to shift into products that command higher prices and larger margins than lager-style, easy-to-drink beers.

The Japanese group and Lion, its Australian subsidiary, last year acquired New Belgium Brewing, the fourth-largest craft brewer in the US, and bought a 25 per cent stake in Brooklyn Brewery in 2016. Kirin also acquired Fourpure Brewing and Magic Rock Brewing, two UK craft brewers, in 2018 and 2019, respectively.

India is seen as a largely untapped beer market with spirits such as whisky the drink of choice for most. Indians drank an estimated 2 litres of beer per capita in 2018, according to UBS, well below other markets including China, Brazil or Europe.

Bira was founded in 2015 and is among the largest and most visible leaders of a craft beer craze in India, with microbreweries springing up in and around large cities as a growing middle class turns to premium beverages.

Beer sales increased 8 per cent in 2019, according to Euromonitor. But growth was derailed by the coronavirus pandemic after alcohol sales were banned nationwide for around six weeks as part of the coronavirus lockdown. Euromonitor estimated that retail outlet sales of beer fell about 16 per cent in 2020.

Alcohol companies in India, where drinking remains taboo for many, have long had to contend with labyrinthine regulations and high taxes.

A number of states, including Gujarat and Bihar, are officially dry, advertising is banned and a policy of discouraging drinking remains enshrined in the constitution.

A person close to Kirin said details of the business partnership had yet to be set, though another person said the deal would give Bira the opportunity to use Kirin's global network to promote its own brews -- including launching in Japan -- and for Kirin to expand in India.

Sequoia India, the venture capital company, owns about 40 per cent of Bira.

Kirin has a chequered history in overseas deals, including a disastrous 2011 foray into Brazil via a $3.9 billion acquisition of family-owned Schincariol. It sold the business for 77 billion yen ($700 million) to Heineken in 2017.

Kirin agreed to sell its Lion Dairy business in Australia, completing the withdrawal from struggling overseas businesses.

The Japanese company has sought to diversify from the shrinking domestic beer business by strengthening its biotechnology and pharmaceuticals divisions.

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