Japan's biggest retailer Aeon Co plans to set up a venture with alcohol retailing affiliate Yamaya Corp. to import alcoholic drinks.

Aeon and Yamaya, business partners since 1994, said they aimed to expand their stable of imported brands, particularly in wine, as well as developing own-brand products and cutting purchasing and distribution costs.

Aeon said sales of alcoholic beverages in Japan were expected to rise 7% annually through 2008. As part of the agreement, Aeon will raise its stake in Yamaya to 16% from 10%, the companies said.

In the year to 20 February, 2005, Aeon recorded revenues of JPY4.2 trillion (US$36.1bn), a rise of over 18% on the previous year. The company became the first retailer in Japan to achieve sales in excess of JPY4 trillion (US$36bn).