E-Malt.com News article: 1564

Japan, Tokyo: Moody's Investors Service said on September 12 it had upgraded to positive from stable the outlook on the Baa3 senior unsecured debt ratings of major beer maker Asahi Breweries Ltd, according to JapanToday. Meanwhile Moody's Investors Service raised the senior unsecured debt ratings of Suntory Ltd to Baa2 from Baa3.

The debt-rating agency said the change reflects Asahi's improved market position and credit profile, despite a challenging market environment. Asahi has improved its position in the domestic market for beer taste products, backed by its leading beer product, Asahi Super Dry, and its successful development of Asahi Hon-nama, its key happoshu product.

The company introduced Hon-nama to the market for happoshu - low-malt and low-priced beer - in 2001 and had a market share of approximately 25% during 1H 2003. The shift in demand from beer to happoshu had posed a challenge to Asahi since the company's source of cash flow was heavily reliant on Asahi Super Dry. However, because of the company's successful development and launch of Hon-nama, along with slowing growth in demand for happoshu, the company's overall market position has stabilized.

Furthermore, Asahi - in response to the growing diversity in consumer preferences - has started introducing new brands to both the beer and happoshu markets. Moody's believes that successful brand expansion will help stabilize its market position in the intermediate term, while increasing promotional expenditures in the short term. Demand for beer taste drinks has been weak this year due to the increased tax on happoshu and the cold weather.

Competition in the beer taste market, which is by nature mature, remains intense. Moody's will continue to monitor Asahi's strategy to maintain its strong operating performance and how it will utilize its generated cash flows to further improve its capital structure, against the backdrop of increasingly difficult market conditions. Asahi Breweries Limited, headquartered in Tokyo, is Japan's leading brewing company.


17 September, 2003