Heineken in talks to buy Japanese brewer Kirin’s Brazil operation

Dutch brewer Heineken N.V. said it is in discussion with Japanese brewer Kirin Holdings to acquire the company’s unprofitable Brazilian business. The Nikkei Newspaper reported on Friday, a price of $870m, a fraction of the $3.9bn Kirin paid for the business.

An acquisition of Kirin’s lossmaking business in Brazil would give Heineken 19% market share in a country where it currently has only 7% share of the market to Kirin’s 12%. But more importantly, it would enable the Dutch brewer pose a stronger challenge to AB InBev, which dominates the market with 67% market share.

A deal would also scale up Heineken’s distribution system so it doesn’t have to rely on Coca-Cola’s bottler network in the country.

Kirin paid $3.9bn to acquire family-owned Schincariol, maker of Schin beer in 2011 as it looked for growth outside of its home market in Japan.

Brazil is the world’s third largest beer market behind China and the United States. However, Kirin’s beer volumes have shrunk 25% since 2012 due to strong competition and a Brazilian economy that is in a recession. The brewer’s Brazilian business unit reported a €151m loss in 2015, though that narrowed in the first nine months of 2016.

AB InBev saw a 4% decline in its beer volumes in Brazil in third quarter, prompting the brewer to cut its revenue forecast, but Heineken reported good  growth due to strong momentum in its premium beer brands, its mainstay in the country.

Kirin held talks with Heineken last year to sell two of its 12 breweries in Brazil but appears to have decided to exit the market altogether.

Both parties said that talks were continuing but had not reached a conclusion.

You may also like:

One Response to Heineken in talks to buy Japanese brewer Kirin’s Brazil operation

  1. Basil Moses says:

    Kirin exist of the Brazilian market is a minus to her quest to build her portfolio outside Japan… And existing the 3rd largest beer market is a huge gain to Heineken whose quest to raise her game against the monster call AB-Inbev. I see Heineken growing to 25% if all goes well. Also this is an important step in the beer war in one of the two home bases of AB-Inbev.

Leave a Reply

Your email address will not be published. Required fields are marked *