Kirin Holdings strengthens presence in China

Kirin Holdings strengthens presence in China

Kirin Holdings is clearly taking the view that it needs to conquer or be conquered. The Japanese drinks giant has agreed yet another foreign deal, and this time it has China's soft drinks market in its sights.

Kirin is linking up with China Resources Enterprise to create a nationwide soft drinks joint venture in the country. After securing greater chunks of the Asia Pacific beer market, including the takeover of Australia's Lion Nathan and acquisition of a 48% stake in San Miguel Brewery, Kirin has turned its focus to soft drinks.

The Japanese group bought 15% of regional powerhouse Fraser & Neave last year. Now, it is upping the ante in perhaps the most promising market of them all: China.

Beer is off the menu in the China Resources Enterprise (CRE) deal, because the Chinese company already operates a business with SABMiller, CR Snow Breweries.

Kirin and CRE could, however, provide stiffer competition to some of the soft drinks market's leading players, including PepsiCo and The Coca-Cola Co, which both see China as crucial to their long-term development.

Sales of soft drinks in China are expected to grow by 23.5% in volume and 27% in value in the country's on-trade between 2009 and 2014, according to Euromonitor estimates. In the off-trade, sales are predicted to rise by 54.1% in volume and 61.1% in value terms over the same period.

Kirin said today that it will take advantage of the strong market dynamics by expanding rapidly in China's soft drinks market. CRE, it said, would benefit from the Japanese group's ability to develop new products and build brands.

The two firms' existing sales networks in China are largely compatible, with Kirin strongest in eastern China and CRE strongest in the south of the country. Kirin also said that it sees "possibilities of leveraging CR Snow's sales and distribution channels" in the country. In addition, CRE already owns 3,000 retail outlets in China.

This deal gives Kirin a significant leg-up in its attempt to dominate the Asia Pacific food and beverages sector by 2015.