just On Call - Kirin Holdings outlines Schincariol sales target
Kirin Holdings has high hopes for Schincariol
Kirin Holdings has said it is overhauling Schincariol's business plan in order to help the Brazilian brewer deliver annual net sales growth of 10%.
Kirin will seek to make quick changes at Schincariol following its acquisition of the brewer for an agreed total of BRL6.3bn (US$3.4bn). The Japanese brewer's president and CEO, Senji Miyake, has said that it will install a new governance structure and a new business strategy at the Brazilian group.
Schincariol is Brazil's second largest brewer, but it has a volume market share of just 15% and relatively weak profits. The largest player in the country, Anheuser-Busch InBev's AmBev, has a market share of around 70% and is looking to target Schincariol's stronghold in the north-east for growth.
Following the restructuring, Miyake told analysts earlier this month that the firm expects Schincariol's net sales to rise by 10% annually. Operating profits should rise slightly faster than this, he said.
As several analysts have anticipated, the group said it will increase Schincariol's focus on premium beer. "Although Schincariol already has a number of strong brands, we believe there is scope for us to leverage Kirin's product development strength in the premium category, which is growing as incomes increase," said Miyake.
Demand for beer in Brazil has been sluggish in 2011, but strong volume growth is expected to return following a 7.5% increase in the national minimum wage, to be implemented early in 2012.
While Schincariol should aid Kirin in achieving its 2015 targets, including net sales of JPY3tn (US$38.4bn), Miyake accepted that the acquisition is a longer-term project. "This acquisition is the first step in our plan for further growth beyond the goals of 2015," he told analysts.
For the presentation slides shown to analysts, click here.
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