TOKYO -- Kirin Holdings will expand a brewery in Myanmar into one of the Japanese beer purveyor's largest in the world as the emerging Southeast Asian market shows promise.
The Tokyo-based group will spend several billion yen (1 billion yen equals $9.1 million) to scale up a factory in Yangon operated by Myanmar Brewery, in which it bought a majority stake for $560 million in 2015. Myanmar Brewery is the country's top beer producer and owns such brands as Myanmar Beer.
Kirin has already installed new equipment at the brewery and will start up a production line this month for a new canned beer.
The expansion will raise the facility's annual output capacity by 60% to 350,000 kiloliters, up from 220,000kl in 2015. This will put it on a par with production sites like Kirin's Yokohama brewery.
Kirin also looks to upgrade Mandalay Brewery, Myanmar's oldest brewery. The Japanese company set up a joint venture with the brewery's parent, Myanmar Economic Holdings, at the end of 2017.
Growth in Myanmar's beer market had been slow, owing to religious prohibitions on alcohol and decades of military rule that restricted foreign investment. But in recent years, the market has grown at an annual pace of more than 10%, Kirin says. By 2021, it is expected to reach 900,000kl, up 80% from 2016, according to British research firm Euromonitor International.
Kirin controls more than 80% of this market. After its investments, Myanmar will account for about 10% of the company's overseas sales and emerge as a leading moneymaker in Southeast Asia.
While investing in Myanmar amid the ongoing Rohingya crisis poses a risk for Kirin, the Japanese brewer aims to defend its hold on the market from incoming competitors, including Heineken and Thai Beverage-backed Fraser and Neave.
Myanmar has faced widespread international criticism over persecution of the Muslim minority. Although the economic impact of the crisis is unclear, foreign investment fell for a second straight year in the 12 months to March, dropping 14%.
If the crisis drags on, it may deter international businesses from investing. "We expect the Myanmar government to handle the situation humanely," said a Kirin public relations representative.