Mega beer deal set to reignite Japanese brewers' foreign ambitions

Thu Oct 15, 2015 6:18am EDT
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By Emi Emoto and Ritsuko Shimizu

TOKYO (Reuters) - The planned $100 billion merger of Anheuser-Busch InBev (ABI.BR: Quote) and SABMiller SAB.L will be a wake-up call to the overseas ambitions of Japanese brewers, which are struggling to grow at home in a saturated market with a shrinking population.

Japanese beer makers including Asahi Group Holdings (2502.T: Quote) and Kirin Holdings Co (2503.T: Quote) hold more than 90 percent of their domestic market, but are tiny globally despite long-standing pledges to do more overseas as Japan's beer market slows.

If AB InBev and SABMiller are successful in their proposed marriage, then it will present Japanese brewers with an even more formidable global competitor.

But if the mega-merger forces the two brewers to shed assets in order to appease antitrust regulators, then Asahi, Kirin and unlisted Suntory Holdings are interested in snapping them up, people familiar with the brewers' thinking told Reuters.

"It will give Japan's brewers a chance to push ahead with their global expansion," said SMBC Nikko analyst Yoshiyasu Okihira.

The deal between the world's top two brewers, aimed at tapping growth across Africa, highlights the insular nature of Japan's beer makers, which often rely on gimmicks such as seasonal packaging and limited-edition drinks to stimulate a flagging domestic market.

Analysts said more overseas M&A deals could help Japanese brewers broaden sales channels of their existing beer brands.

Forays abroad, such as Kirin's $560 million investment in Myanmar's top brewer in August and Suntory's $16 billion acquisition of U.S. spirits maker Beam Inc in 2014, are increasingly crucial with domestic beer consumption falling in Japan over the past two decades.   Continued...

Japanese beer of brands such as Asahi, Kirin and Suntory are placed in a fridge at a store in Tokyo Octber 15, 2015.  REUTERS/Issei Kato