This week saw the fall of Kirin as leader of Japan's brewing industry for the first time in almost 50 years. As rival Asahi takes the mantle, Daisuke Wakabayashi investigates Kirin's strategy to reassert itself in the market, efforts by no means solely focussed on beer.

Kirin Brewery Co Ltd ceded its title of Japan's top beermaker to arch-rival Asahi Breweries Ltd for the first time in 48 years on Wednesday, after reporting a 6.6% year-on-year decline in sales.

Kirin said it shipped 201.2m cases of beer and "happoshu", a popular low-malt beer alternative, in 2001. That fell short of the 217m cases sold by Asahi last year, a year-on-year rise of 9%. One case is 12.6 litres (2.77 gallons).

"It is unfortunate," Kirin President Koichiro Aramaki told a news conference. "As a group, we have grown in many areas, but in the end our ranking has fallen."

Asahi vaulted to the top spot less than a year after introducing its "Honnama" happoshu brand last February - long after Japan's other brewers began selling the inexpensive low-malt brews.

According to sales figures compiled by Asahi, the industry sold 561m cases of beer and happoshu in 2001. That gives Asahi a market share of 38.7% and Kirin just 35.9%.

Final figures for 2001 will be released by an industry group on January 16 with a complete breakdown of market share.

In terms of traditional beer, Asahi has been the industry leader with its best-selling "Super-Dry" brand since 1998, but Kirin had been able to cling to the top spot for combined shipments of the two brews.

Happoshu is taxed at a lower rate than beer because of its low-malt content. It has been steadily gaining in popularity due to its cheaper price, but


"Asahi was slow to jump on the happoshu bandwagon"
Asahi was slow to jump on the happoshu bandwagon.

Kirin said on Wednesday it aimed to ship a combined 201.4m cases of beer and low-malt happoshu in 2002, a rise of 0.1% from last year but more than 10% less than the 224m cases targeted by Asahi released on Tuesday.

Although trailing Asahi in traditional beer sales, Kirin announced a campaign to fortify its leading position in the happoshu segment by launching "Gokunama", a new brand it plans to sell for 135 yen (US$1.02), 10 yen less than any other happoshu brand.

The 10 yen discount will be made possible partly by cutting marketing costs, Kirin said. In particular, it will not advertise the new brand on television.

Company officials said Kirin planned to reduce marketing costs by more than 10% year-on-year, but declined to specify a figure.

Overseas

Kirin's cost-cutting efforts follow three high-profile acquisition deals in December by the Japanese beer giant, which has been diversifying its operations and spreading its wings overseas and away from the saturated domestic beer market.

Last month, it acquired a 15% stake in Philippine food and beverage giant San Miguel Corp for about US$540m and bought the food division of Takeda Chemical Industries Ltd for about 20 billion yen (US$150.5m).

It also agreed to buy Bourbon whisky brand Four Roses from British firm Diageo Plc and Pernod Ricard of France for an undisclosed sum.

"We are extremely hopeful that in the long term our recent acquisitions will prove to be deserving of our investments," Aramaki said.

He said he hoped the San Miguel deal would start to bear fruit in terms of group sales in the first half of the current business year to the end of December.

As part of its efforts to branch out, Kirin said it hoped to become the top seller of "chuhai", a fruit-flavoured cocktail made from soda water and a traditional Japanese vodka-like spirit.

The company said it aimed to more than triple production of chuhai in 2002, with a view to selling 150,000 kilolitres (kl) and overtaking unlisted Suntory Ltd, the current chuhai leader.

Asahi did not disclose targets for chuhai shipments on Tuesday.

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