Brazil: Heineken completes deal with Kirin

Already in August 2016 inside.beer speculated about a possible sale of Kirin’s Brasilian beer business to Heineken . In January 2017 rumors became more intense and today it was officially confirmed: Heineken agreed to buy the Brazilian assets of Japanese brewer Kirin at a price of ¥77 billion ($700 million). This is far below the price of ¥100 billion ($872.3 million), which was reported earlier by different media. Completion of the acquisition is subject to customary regulatory approvals and is expected in the first half of 2017, Kirin said in a statement.

In 2011 Japan's Kirin Holdings Co. bought Brazilian’s No. 2 brewer Schincariol at a price of 4 billion reais ($1.25 billion) and renamed it Brasil Kirin. The move was intended to gain a foothold in the fast-growing South American market and to make Kirin less dependent on an aging and shrinking beer market in Japan. But Brazil's economic slump and unfortunate management has hardly affected the business since then and cut the domestic market share half to 8.5%. This puts the company now on fourth place behind AmBev, the local arm of international brewer AB InBev with a 66% market share, Grupo Petrópolis with 14% and Heineken with 9%. Hefty operational and impairment losses even resulted in the Japanese parent’s first-ever net loss in 2015.

Kirin is now shifiting its focus more on the markets in South-Asia and Oceania, where it is already invested in several markets:  1998 and 2009 Kirin acquired 100% of the shares of Lion Nathan in New Zealand and Australia, 2002 and 2009 the company bought a 43% stake in San Miguel Corp. in the Philippines, 2006 it acquired a 25% stake in Hangzhou Qiandaohu Brewery Co in China, 2015 Kirin bought Myanmar Brewery in Myanmar and yesterday the company announced the acquisition of Mandalay Brewery in the same country, boosting the market share up to 90%.

Commenting on the transaction between Heineken and Kirin, Jean-Francois van Boxmeer, Chairman & CEO of Heineken, said: "This transaction marks a step-change in scale in an exciting beer market, building on our success to date in the premium segment and strengthening our platform for future growth. It reiterates our commitment to the Brazilian market and confidence in our ability to generate attractive returns over the long-term across all segments of the market. I look forward to welcoming our new colleagues from Brasil Kirin into Heineken and working with them to take the combined business forward."

 

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