Ktetaichinh’s Blog

December 10, 2009

Japan’s Sapporo to enter Vietnam beer market

Filed under: Uncategorized — ktetaichinh @ 6:32 pm

VNBusinessNews.com – Sapporo Holdings Ltd. Thursday became the latest Japanese company to look overseas as a shrinking population and a gloomy economic outlook take a toll on its domestic business

, saying it will enter Vietnam’s lucrative beer market by buying a majority stake in Kronenbourg Vietnam Ltd.

The Japanese beer maker said it will buy a 65% stake for about $25 million in Kronenbourg Vietnam, which is equally owned by Carlsberg Brewery A/S and Vietnam National Tobacco Corp., or Vinataba. Established in 2007, the joint venture between Carlsberg and Vinataba isn’t fully operational.

After the transaction, which will be completed as early as in January, Kronenbourg Vietnam will change its name to Sapporo Vietnam Ltd. The state-run Vinataba will hold 35% in the joint venture after the deal closes.

Sapporo’s exposure to overseas markets has been limited as indicated by its mere Y25 billion of sales outside Japan in 2008, even after the inclusion of Toronto-based Sleeman Breweries Ltd., which it bought in 2006. That made up 6% of Sapporo’s overall sales in 2008.

But Sapporo said the deal marks the first time a Japanese beer maker has obtained a beer manufacturing and sales network in Vietnam, where beer demand has been growing more than 10% annually.

Sapporo said the joint venture with Vinataba will start constructing a new plant in Long An Province on the outskirts of Ho Chi Minh City. The plant is scheduled to start production from early 2012.

The joint venture aims to rack up sales of 150,000 kilolitters of beer, or 3% of the market share in natiowide Vietnam by 2019. That would translate into sales of Y10 billion-Y11 billion.

Sapporo’s domestic rivals are also stepping up efforts to increase their overseas presence. Last month, Suntory completed its acquisition of privately held European beverage maker Orangina Schweppes Group.

Suntory is currently in merger talks with Tokyo-based counterpart Kirin Holdings Co. (2503.TO), the completion of which would create a beverage giant with sales of Y3.8 trillion ($40.9 billion) based on 2008 earnings. Kirin owns Australia’s Lion Nathan Ltd. (LNN.AU) and 48% of the Philippines San Miguel Brewery Inc.

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