Kirin Holdings anounced earlier this week, to write off JPY 21.4 billion (USD 193 million) in impairment losses on its Myanmar beer unit. The brewery said that the step was necessary in view of the “high level of uncertainty of the operating environment and increase in the country risk” due to the current political situation in the Southeast Asian country.
On February 1, a coup d’etat took place in Myanmar in which the democratically elected forces were ousted and a military government was established. Kirin Holdings, that owns 51% of Myanmar Brewery and Mandalay Brewery, two leading beer producers in the country, shortly later announced “to terminate [its] current joint-venture partnership with Myanma Economic Holdings Public Company Limited (MEHL), which provides the service of welfare fund management for the military.” The company also said it would “be taking steps as a matter of urgency to put this termination into effect.” (inside.beer, 5.2.2021) Kirin planned to ask MEHL that owns 49% in Myanmar Brewery to sell its shares to Kirin or local companies that are not affiliated with the military.
However, as this did not take place, consumers shunned the brand and restaurants stopped serving it as a protest against the military regime. In addition, the spread of the corona virus hampered the sale of beer. As a consequence, sales dropped in comparison to one year earlier by 28% to 152 billion Kyat (USD 92.3 million) in the first six months of the year.
“We are not considering withdrawal from Myanmar at this moment,” Toru Yoshimura, Senior Executive Officer of Kirin told Nikkei Asia on Tuesday. “We are still discussing the negotiation [to terminate the joint-venture with MEHL], but the current Covid-19 situation makes it difficult to proceed,” he added.