Asahis P&N Beverages buy adds spice to growing rivalry

Asahi's P&N Beverages buy adds spice to growing rivalry

Asahi Breweries' deal to purchase P&N Beverages will see it gain the upper hand on its old foe, Kirin Holdings, in Australia's soft drinks market - at least for the time being.

Competition is hotting up in Australia's soft drinks sector, with even market leader Coca-Cola Amatil looking a little less dominant than it once did.

Asahi's announcement today (26 August) that it has agreed to acquire P&N Beverages for AUD364m (US$323m) will bring together the number two and three players on the market. P&N Beverages is set to add around 50% to Asahi's current annual soft drinks sales in the country, which are currently made through Schweppes Australia.

The combined businesses could have sales of around JYP100bn (US$1.2bn) in 2010, if Asahi's prediction of JPY68bn in full-year sales for Schweppes is added to Japanese yen equivalent sales of JPY29bn for P&N in 2009.

Coca-Cola Amatil remains way ahead, with sales of AUD4.56bn in 2009 - equivalent to JPY342bn at current exchange rates. Yet, the gap is less than it once was and Coca-Cola Amatil is facing rivals with more formidable firepower and focus than it has become used to.

Lingering on Asahi's shoulder is its arch-rival from Japan, Kirin Holdings. Kirin has stated publicly that it wants to develop the soft drinks business of Lion Nathan National Foods, the entity it formed in Australia after acquiring Lion Nathan last year.
Kirin said earlier this month that Lion Nathan National Foods' soft drinks and food division was forecast to reach sales of JPY80bn in 2010. Further back, but no less focused, is Japan's Suntory Holdings. In 2008, the company bought the Frucor soft drinks business from Danone and Suntory, alongside Kirin and Asahi, is committed to expanding its overseas sales to offset a stagnant Japanese drinks market.

Suntory reported that Frucor had sales equivalent to JPY30bn in 2008. More up-to-date figures have not been issued by the privately-held firm, but it did say earlier this year that sales in 2009 "were favourable" against the previous year. It said that it would "step up" growth plans for the business.

Australia's soft drinks market has become a battleground for Japan's drinks giants. Asahi is ahead of the pack, but is clearly going to have to work hard to stay there. Coca-Cola Amatil, meanwhile, cannot afford to rest on its laurels.