Japan’s Kirin to sell Australian dairy unit to local peer Bega Cheese

Cream cheese and tomatoes on bread.

Japanese brewer Kirin Holdings will sell its Australian beverage and dairy subsidiary to Australian dairy company Bega Cheese, Nikkei has learned.

The sale price is estimated at more than 40 billion yen ($385 million). The deal is expected to be announced soon.

Kirin had originally planned to sell the unit to a Chinese company, but the transaction was put on hold amid growing trade tensions between Australia and China. The sale to Bega comes just three months after Kirin began looking for a new buyer.

For Kirin, the deal marks the end of a drive to restructure or sell off less profitable businesses. The company plans to focus on health-related products as part of its diversification strategy while expanding its craft beer business overseas.

A Kirin unit that manages the Australian operation, Lion Dairy & Drinks, had signed a deal to sell to China’s Mengniu Dairy in the fall of 2019. But trade tensions between Australia and China boiled over, and this summer Australian authorities announced a policy rejecting such deals involving Chinese buyers. In response, Kirin canceled the contract and began searching for a new buyer.

One candidate, Canada’s Saputo, withdrew from acquisition talks. Saputo acquired Lion Dairy & Drinks’ cheese business in 2019. A local investment company was another possible buyer, but Kirin eventually chose Bega Cheese, a local dairy product manufacturer, apparently eager to ensure the local business would survive.

With the sale, Kirin has revamped or sold all three businesses that it identified as low-profit operations in its previous medium-term management plan, which ended in December 2018.

According to Kirin’s long-term management plan, it is focused on the health business, which it sees as an important new source of revenue.

Last year, it also bought a stake of about 30% in Fancl, a Japanese maker of supplements and beauty products. Kirin aims to generate 15 billion to 18 billion yen in profit from its health business for the fiscal year ending December 2024, five to six times what it earned for the fiscal year ending December 2019.

Kirin has shifted its strategy in the alcoholic drinks market overseas from pushing into emerging markets, after selling off its Brazilian unit, Brasil Kirin.

Kirin plans to focus on the craft beer business overseas, where sales volumes are lower but unit prices and profitability are higher. It previously acquired two British craft beer makers through its Australian unit Lion. It also bought New Belgium Brewing, the third-largest craft beer producer in the U.S. Kirin has shown interest in acquiring more craft beer brewers in the future.

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).

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

  • 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.