Japan: Financial Investors grasp at Orion Breweries

Orion Breweries, the fifth largest brewery in Japan will presumably be jointly bought by U.S.-based private equity firm Carlyle Group and Japan’s biggest investment bank Nomura Holdings, the Nikkei reported on Friday.

As the Japanese beer market is already shrinking for decades, domestic beer producers seek to expand in export or abroad with varying success. Orion’s announced move might provide the brewery with sufficient funds to stimulate export of its beer in overseas destinations. The deal, which is worth “tens of billions of yen” (hundreds of million U.S. Dollars), is meant to help the company to expand in the United States and in other parts of Asia.

Reportedly, Asahi, the market leader in the Japanese beer market and also the largest shareholder in Orion, will keep its ten percent stake in the Japanese brewer.

Orion Breweries, Ltd. was established on May 18, 1957, when Okinawa was still under the control of the U.S. military occupation government. Since Okinawa’s reversion to Japan in 1972, breweries based in Okinawa have enjoyed reduced alcohol taxes. The preferential treatment, which gave local breweries a competitive advantage, expired in May 2007.

From a total beer production in Japan of 51.5 million hl (2017), Orion Breweries holds only a 0.9% market share. Market leader is Asahi Breweries with 39.1%, followed by Kirin Brewery Co. (31.8%), Suntory Beer (16%) and Sapporo Breweries (12.1%).

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