Budweiser Set to Tap Japanese Beer Market
TOKYO (AP) _ Seeking to fully tap one of the biggest beer markets in the world, Anheuser-Busch Inc. is preparing to announce a joint venture with Japan’s No. 1 beer maker, Kirin Brewery Co. Ltd.
Anheuser, the world’s biggest brewer, is dropping an affiliation with a smaller brewer, Suntory Ltd. It’s an effort to take advantage of deregulation that could make it easier for foreign brewers to do business in this heavily regulated economy.
Anheuser’s Budweiser brand is the biggest foreign beer here but has just 1.2 percent of the market. Anheuser hopes that by switching Japanese partners, it can eventually grab a 5 percent share - a goal analysts say is not out of reach.
″Bud’s chances in Asian markets are very, very big - especially in Japan,″ says Shuichi Shibanuma, food and beverage analyst at Morgan Stanley (Japan) Ltd.
Anheuser-Busch had relied on Suntory, Japan’s largest whiskey maker but a lightweight in the beer business, to brew and market Budweiser under license since 1984.
Shibanuma called that affiliation ″a big mistake″ since Suntory was bound to promote its own beers more than Bud.
Bud sales had been growing, but not at the rate one might expect for the world’s top brand. The St. Louis brewer hopes to change all that with the deal to be announced Thursday - a joint venture owned 90 percent by Anheuser and 10 percent by Kirin, which controls half the domestic beer market and is the fourth biggest brewer worldwide.
The new company, Budweiser Japan Co., will import canned beer from the United States and sell bottles and kegs made under license by Kirin. More importantly, it will harness Budweiser’s advertising prowess and set up its own distribution network - a first for a foreign brewer.
That would have been unimaginable several years ago, but rapid changes in the rigidly controlled alcohol business might just give the King of Beers a fighting chance.
With deregulation making it easier to get a liquor license, discount liquor stores have been popping up everywhere, and even supermarkets and convenience stores are starting to carry beer.
Unlike the traditional mom-and-pop stores that still sell much of the beer here at prices fixed by the major brewers - Kirin, Asahi, Sapporo and Suntory - the larger retailers are starting to shake things up by cutting prices and carrying more brands.
Experts say those factors could help Budweiser make it into the tightly knit distribution system, but the going will be tough. Even with the muscle of mighty Kirin behind them, many wholesalers are likely to initially resist Bud’s advances.
″Budweiser has to convince Japanese wholesalers that they’re trustworthy,″ says Atsushi Hamaguchi, who heads the imported wine and beer department for Hiroya Co., a medium-sized wholesaler.
As deregulation makes the market more competitive, Kirin will benefit from Budweiser’s proven marketing prowess, analysts said.
″Japanese brewers will be facing a very tough situation,″ says Eizo Uchikura, food and beverage analyst with Nomura Research Institute Ltd. ″They make gentlemen’s agreements regarding price and marketing, but once foreigners come in, those agreements will be broken.″
Anheuser’s effort to sell more beer here is worth the trouble. A standard 10 1/2 -ounce can of beer goes for more than $2, although half of that goes to tax, and the overall beer market is one of the few in the world that is still growing.
Beer sales grew about 7 percent each year from 1989 to 1991, and the market is now worth about $25 billion. The recession cut sales growth to 2 percent last year, and cool summer weather this year is likely to make things worse, but the long-term trend is still upward.