Heineken said to buy Schincariol from Kirin

According to a report in Brazil Journal, Heineken is said to buy Brasil Kirin, the Brazilian branch of Japanese competitor Kirin. Brasil Kirin was founded in 1939 as Cervejaria Schincariol in Itu in the state of São Paulo. In 2011 Japan's Kirin Holdings Co. bought a 50.45 percent controlling stake in Schincariol at a reported price of $2.6 billion. 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 domestic beer market.

Brasil Kirin, the maker of brands like Schincariol, Nova Schin and Devassa, experienced right from the start problems in a highly competitive market which intensified in the second half of 2013. “In this setting, we implemented price increases to secure profits, and those increases were excessive. Also, the renewal of a core brand ended up backfiring and losing the support of consumers. In these ways, we had a series of marketing failures. Kirin Holdings needed to move quickly in response to this situation, and we did not have a governance system that was suitable for that task”, Kirin Holdings President & CEO Yoshinori Isozaki freely stated in an interview.

Those management failures lead to idle capacities in the Kirin breweries which could be used by Heineken for their own expansion strategies in the South American market. Heineken entered the Brazilian market in 2010 with the purchase of Femsa´s Brazilian operations, producing brands like Kaiser, Bavaria, Xingu and Sol. Heineken already runs six breweries in Brazil producing 12.1m hectoliters a year with plans to build one more. Just a few days ago the company inaugurated a $124 million investment, expanding its Ponta Grossa plant in the state of Paraná by 40%.

Two thirds (67%) of the Brazilian beer market are currently dominated by Ambev, followed by Petropolis (13.1%), Heineken (9.6%) and Brasil Kirn (8.2%). A merger of the two latter ones would make Heineken number two in Brazil with a combined market share of 17.8%.

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