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Business

Kirin to drink up another Myanmar brewery

Deal would give Japanese beer maker control over 90% of local market

The Myanmar beer market is growing fast.

TOKYO -- Kirin Holdings plans to buy Mandalay Brewery of Myanmar for an estimated several hundred million yen in its latest push to strengthen its presence in the Asia-Oceania region.

Mandalay Brewery, based in the northern city of Mandalay, is the country's oldest brewery. It operates as part of the military-backed Myanmar Economic Holdings and has a market share of just under 10% in Myanmar.

Kirin will create a local subsidiary to take over the business from Myanmar Economic Holdings. The Myanmar Investment Commission is seen approving the deal soon.

Kirin in 2015 bought local market leader Myanmar Brewery, which controls roughly 80% of the country's beer market. Having the two companies under its wing will give Kirin 90% of the market.

Kirin stands to benefit from a sales and logistics network spanning the entire country and reap synergies from cross-utilization of production facilities.

The Japanese company seeks an edge against such foreign rivals as the Netherlands' Heineken and Denmark's Carlsberg.

Myanmar is one of the few growing beer markets amid lackluster momentum in global consumption. Even in China, the world's biggest market, consumption has declined.

Myanmar's beer consumption in 2014 reached 210,000 kiloliters. Per-capita volume was a mere tenth or so that in Southeast Asian neighbors Thailand and Vietnam. But with its economy growing rapidly, beer drinking is on the rise, mainly in cities. The market is expected to more than double from 2013 levels by 2018.

Meanwhile, the company is taking steps to unload its struggling Brazilian business -- acquired in 2011 for 300 billion yen ($2.64 billion at current rates) -- to Heineken. The latest acquisition plan signals Kirin's growing focus on the Asia-Oceania region.

In Australia, Kirin turned Lion into a subsidiary in 2009. The beer maker has a roughly 40% market share there. That same year, it took a 48% stake in the beer unit of Philippines' San Miguel.

Kirin may also purchase state-owned Saigon Beer Alcohol Beverage, which the Vietnamese government plans to sell. The brewery, also known as Sabeco, has a 45% share in Vietnam, and others, including Japan's Asahi Group Holdings, global leader Anheuser-Busch InBev and Thai Beverage have shown an interest, too.

Kirin seeks to focus investment in Asia to cultivate its earnings base, but competition is heating up there as demand grows.

(Nikkei) 

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