Brazil: Heineken to buy Brasil Kirin from Japan's Kirin Holdings

Rumors about a possible sale of Kirin’s Brazilian business to Heineken were now confirmed by the Dutch brewing group. Heineken verified on Friday talks with Japanese competitor Kirin Holdings Co over its 12 breweries in Brazil, which operate under the name Brasil Kirin. The two companies have largely agreed on the transaction, which will take place most likely in February or March this year and will value the business at around 100 billion yen ($872.3 million).

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 on 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%, which 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’s new president, Yoshinori Isozaki, who took office in March 2015, has since restructured the Brazilian operations and sold a brewery in the state of Rio de Janeiro to competitor AB InBev. But it looks like he has lost faith in the pace of the restructuring process now and wants to concentrate its activities on Asia and Oceania, where the Japanese company controls a number of popular local brands.

Through the purchase, Heineken will increase its market share in Brazil to 17.5% and gain the No. 2 position in the third largest beer market worldwide.

 

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