PHNOM PENH/TOKYO -- Opposition to Japanese beverage giant Kirin's joint venture with a military-run company in Myanmar is creating headwinds for its expansion plans in the U.S. craft beer market.
The mega brewer is poised, via its Australasian subsidiary Lion, to acquire Colorado-based New Belgium Brewing, one of the largest independent craft beer breweries in the U.S.
The takeover, however, is subject to a vote by New Belgium's almost 700 employee-shareholders. Those employees are under pressure from human rights groups to oppose the deal, though management remains committed to the sale.
Activists say New Belgium's reputation as a socially responsible company stands to be tarnished should it proceed because of Kirin's ties with military conglomerate Myanmar Economic Holdings Ltd. (MEHL).
The United Nations in a report in August warned that MEHL's revenue was funneled to the military, enabling the armed forces' brutal crackdown against the country's Rohingya Muslims.
Via joint ventures with MEHL, Kirin co-owns Myanmar Brewery Co. and Mandalay Brewery, and controls more than 80% of Myanmar's beer market.
Founded in 1991, New Belgium is the fourth-biggest independent craft brewery in the U.S. and well-known for its flagship beer, Fat Tire Amber Ale. It became 100% employee-owned in 2013. Should the deal proceed, it would be wholly acquired by Lion Little World Beverages, the craft beer division of Kirin-owned Lion.
The company is looking to close the deal by the end of December, according to Leah Pilcer, director of communications at New Belgium
Long-time Burmese democracy campaigner Khin Ohmar, however, is urging New Belgium not to become part of Kirin if the brewer maintains its involvement with MEHL, saying the Japanese giant is "complicit in international crimes."
"New Belgium employees are in a unique position to take the right stand on history and for humanity and refuse to sell their business to Kirin, as long as Kirin continues to do business with the international criminals, the Myanmar military," she told Nikkei.
The Karen Organization of America, the Karen Community of North Carolina and Asheville-based Inclusive Development International also urged New Belgium employees to vote against the deal.
"The Burmese state and its key actors have committed genocide against the Rohingya and crimes against humanity against other ethnic minorities," the groups said in a joint statement. "These crimes are enabled by the Burmese military's business interests, including their USD$960 million partnership with Kirin. As a subsidiary of Kirin, New Belgium would become part of a key financial network empowering the Burmese army to continue committing genocide and crimes against humanity."
In a statement to Nikkei, Kirin said that "respect for human rights is fundamental to all of its business activities" and that it is taking steps to protect human rights in its operations.
"In Myanmar, we will continue to actively work with MEHL, our joint-venture partner, to improve transparency and governance, reduce negative risks including human rights, and have a positive impact on Myanmar's society and economy," the statement continued.
The financial terms of the deal have not been disclosed
In an open letter discussing the sale, New Belgium co-founder and CEO Kim Jordan was committed to remaining a "force for good as a business," pointing to the company's B Corporation certification. The certification is issued by global nonprofit B Lab to for-profit companies that meet various social and environmental standards.
"Right away, the folks at Little World told us that they were captivated by this model, and they are asking us to retain our B Corp status," Jordan wrote.
She said while the deal would end its employee-owned status, more than 300 employees would get more than $100,000, with some receiving "significantly greater amounts."
"Over the life of our [employee stock ownership plan], including this transaction, the total amount paid to current and former employees will be nearly $190 million," she wrote.
In a statement to Nikkei, the company said the potential deal would not "change who New Belgium is or what we support."
"While reports about Kirin's operations in Myanmar gave us pause, we believe Kirin's commitment to human rights aligns with our mission and we remain fully committed to our core values and beliefs," it continued.
The pressure on the New Belgium deal comes as Myanmar's civilian leader Aung San Suu Kyi appears at the International Court of Justice to answer a genocide charge over the military campaign that drove 700,000 members of the Muslim community to neighboring Bangladesh.
Activists are hoping the publicity surrounding the trial will increase the pressure on international businesses like Kirin to sever ties with the Myanmar military.
"The profits are being pumped back into the military, helping to fund their operations," said Mark Farmaner, director of the Burma Campaign UK, which has published a "Dirty List" of about 80 companies linked to the Myanmar military.
"Kirin are literally helping to fund genocide."
Simon Billenness, executive director of the International Campaign for the Rohingya, which has launched a boycott campaign targeting companies, including Kirin, for their Myanmar operations, urged them to divest.
"The heat is just going to keep increasing on Kirin," he said. "It's going to prove to be a barrier and a hindrance to them acquiring more companies, particularly craft brewers and other companies that have a more socially responsible approach to business."
Lion declined to comment for this story.
Additional reporting by Takeru Goto.