E-Malt.com News article: China & Japan: Kirin is to double capacity in China, the world’s largest beer market

Kirin Brewery Company, Limited (“Kirin”), Japan's second-largest beer brewer, announced on November 24 plans to construct a new brewery through Group company Zhuhai Kirin President Brewery Co., Ltd. (“Zhuhai Kirin Brewery”), doubling its production capacity in Zhuhai City. Construction is scheduled to begin in February 2006, for completion in June 2007.

The Tokyo-based brewer currently owns 60% of Zhuhai Kirin President Brewery Co, a venture established in 1996, jointly with its Taiwanese partner Uni-President Enterprises Corp to principally serve southern China.

At the same time, Kirin will commence preparations for Kirin (China) Investment Co., Ltd., Kirin’s holding company in China, to acquire all of the equity held in Zhuhai Kirin Brewery by joint investment partner Uni-President Enterprises Corp. (Tainan Hsien, Taiwan, Republic of China), and make Zhuhai Kirin Brewery a wholly owned subsidiary of Kirin. Basic agreement on the acquisition of shares was reached on November 23, 2005. The transfer of shares is scheduled to take place by the end of the year, at which point the company name will also change to Kirin Brewery (Zhuhai) Company, Limited. The performance of Zhuhai Kirin Brewery to date has been highly rated inside and outside the industry, with the Company receiving a 2004 award for high foreign exchange earnings and high pre-tax profits from the Chinese Association of Foreign-Invested Enterprises. Further development will be aimed at building on the Company’s strong roots in China.

Kirin Group will be investing ¥10 billion in these initiatives, as part of active measures to build a strong position in the highly competitive beer market in China.

In an economy that is generating strong overall economic growth, the beer market in China is attracting considerable attention. Beer consumption has continued to grow, and it is now the world’s largest beer market. Kirin Group is pursuing a strategy of active development in China, focusing on three primary regions: Northeast China, the Yangtze River Delta, and the Pearl River Delta. Zhuhai Kirin Brewery’s operations are centered on the Pearl River Delta region, and with expected annual market growth of around 15% the area is becoming a focus of substantial capital investment and competitive activity from industry participants.

The new factory will significantly improve productivity and cost competitiveness, while taking full ownership of the company will facilitate rapid decision making and a flexible approach to business development and implementation. Kirin views these initiatives as essential to ensuring success in the competitive Chinese market, and intends to continue pursuing business expansion in the Pearl River Delta region.

The new factory will incorporate global-standard environmental features, and is being designed to produce very high quality beer with high levels of hygiene and low energy usage. Approximately ten brewing and manufacturing experts from Kirin will be working directly at the brewery, with the aim of introducing Kirin’s technical and quality control expertise. The new factory will brew Haizhu Draft and other locally branded products, along with Kirin brands such as Kirin Chun Zhen Wei Beer and Kirin Ichiban Shibori. In addition to marketing in the Pearl River Delta region, Kirin intends to commence full-scale shipments to the Yangtze River Delta region, Hong Kong, Taiwan, and the Philippines. In the longer term the factory will be positioned as a primary manufacturing center for Kirin Group in Asia, with consideration given to the production of Kirin Chu-hi Hyoketsu—launched in the Shanghai market in 2005—and other products.

As the global beer market consolidates, Kirin Group is actively developing its business outside Japan in its designated key markets of China, Asia and Oceania. Through the investment announced today, Kirin is seeking to establish a superior position in the Pearl River Delta region, while accelerating its overall business development in the competitive Chinese market.


25 November, 2005