Falling sales of traditional beers and increased competition in the "third beer" category have seen Sapporo Holdings report a 22% fall in 2005 net profits. Sapporo said today (17 February) that it saw net profit reach JPY3.6bn (US$30.38m) last year, down from last year's JPY4.64bn.

The company reported an 8.3% fall in full-year revenues to JPY453.7bn. Operating profits fell 56% to JPY10.3bn.

Sapporo had controlled the "third beer" category, which is made from non-malt ingredients and so carries a lower taxation rate. However, the success it had with its product saw rivals such as Kirin enter the market. Kirin now commands the number one spot in "third beer".

Looking forward, the company said that it is predicting a group net profit JPY4bn for 2006, up 10%, with a 2.5% rise in sales to JPY465bn.

Separately, Dow Jones reported today that Sapporo was taking steps that will help the liquor and beverage maker ward off hostile takeover bids. No further details were given in the report, however.

US investment fund Steel Partners holds a 17.59% stake in the company.