Japan’s Kirin to divest all shares in China soft drink venture for $874m

Photo: Reuters

Japan’s Kirin Holdings plans to divest all its shares in a Chinese soft drink joint venture with local beverage giant China Resources Holdings for around 100 billion yen ($874 million), Nikkei has learned.

The Japanese brewer is to sell its 40% stake in China Resources Kirin Beverages to a Chinese fund as early as next month, sources said, marking a turning point for the company’s overseas business, whose earnings base remains mostly in Asia.

Kirin intends to shift its focus to more lucrative sectors such as craft beer and away from China’s sluggish soft drinks business, the sources said.

China Resources Kirin Beverages was established in 2011, with Kirin holding a 40% stake and China Resources 60%. Kirin has invested about 33 billion yen in the venture, which makes and sells tea and coffee beverages.

Kirin is making final adjustments to a contract with the Chinese fund. It is expected that the brewer will record a gain on the sale in its consolidated financial statements for 2022.

In China, Kirin produces its flagship Ichiban Shibori beer through a wholly-owned local unit.

The dissolution of its joint venture with China Resources means Kirin will withdraw from the production of soft drinks, though the Japanese company will seek to license its brands to its former venture partner.

Kirin has been struggling overseas since purchasing brewers and soft drink makers in emerging economies, acquisitions that were hastened by Japan’s waning thirst for beer. The brewer in 2011 acquired a beer business in Brazil for about 300 billion yen, then sold it for 77 billion yen in 2017 amid intensifying competition.

Asahi Group Holdings, Kirin’s Japanese rival, in 2018 sold shares in Tsingtao Breweries, a major Chinese beer company.

Asked for comment on the divestment, Kirin told Nikkei that it is “always considering recombining our portfolio, but nothing on this matter has been decided. As such, we would like to refrain from commenting.”

Kirin is shifting to high-value-added products in developed countries. It sold its milk-based beverage business in Australia to Bega Cheese, a major Australian dairy company, for about 45 billion yen, then acquired Fermentum Group, a collection of craft beer and other beverage makers in Australia, for 40 billion yen and Bell’s Brewery of the U.S. for the same price.

Kirin plans to invest in new growth fields, using the cash gained from selling its share of the Chinese venture.

This article was first published in Nikkei Asia.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.