All-rounder ambitions: Kirin announces plan to bridge businesses between beer, functional food, and pharma

By Tingmin Koe contact

- Last updated on GMT

Kirin has introduced a new corporate logo together with the announcement of its medium-term business plan for FY 2019 to 2021.
Kirin has introduced a new corporate logo together with the announcement of its medium-term business plan for FY 2019 to 2021.

Related tags: Alcohol, Beer, Health food, Beverages

Kirin — which has its roots in the beer business — has launched a nine-year plan to better align its food, nutrition and pharma sections, with a major focus on health and wellness.

CEO Yoshinori Isozaki announced the “Kirin Group Vision 2027” on Thursday (Feb 14).

The firm aims to be a global CSV (Creating Shared Value) leader providing value-adding services across multiple portfolios, from serving general needs to special needs, preventative healthcare, and medical treatment by 2027.

“The Kirin Group will expand the business of high-functioning ingredients and establish a unique business model by leveraging the Kirin Group’s extensive experience and assets in pharmaceuticals and food & beverages so as to provide solutions to health issues that have not been addressed.

“The Kirin Group will launch several new businesses that offer products and services tailored to meet the specific need of individual consumers and will eventually grow them into another core of the Group,”​ according to a company’s statement.

Profit growth will come from existing businesses as it seeks further opportunities.

Earnings wise, it is targeting a ROIC (Earnings before interest and after tax) of 10% increase by FY 2021 and a CAGR of 5% growth for its normalised EPS.

As of Dec 2018, Kirin recorded a revenue of JPY$1.93tr (US$17bn), a 3.6% growth from the previous year.

Normalised operating profit was JPY$199.3bn (US$1.7bn), 2.4% higher than 2017, however, profit attributable to owners of the company nosedived 32.1% YoY.

For this year, it is aiming to hit a revenue of JPY$2tr (US$18bn), which is a 3.6% growth.

Consolidated normalised operating profit, however, is expected to decline due to upfront investments aimed at strengthening the foundations for growth from a medium-to-long-term perspective, in addition to soaring logistics costs, according to the firm’s latest financial presentation. 

Brewery as the base

As part of the business plan, Kirin will push for profit growth from its traditional brewery and beverage business.

Its brewery businesses currently include Kirin Brewery, Lion, Kirin Beverage and Myanmar Brewery.

For Kirin Brewery, one of the plans to pump profit growth is to broaden its ready-to-drink (RTD) alcoholic beverage offerings.

“The company intends to broaden its RTD offerings to meet changes in the alcoholic beverage market expected in the wake of an increase in the consumption tax rate and resulting from increasingly diverse consumer preference for alcoholic beverages,”​ the company said.

Hon-Kirin, a RTD beer released last March topped the sales chart, hit a sales volume of 128,000kl, four times higher than the second most popular product, the Nodogoshi Special Time.

Another plan is to support Japanese hop farmers and offering Tap Marché, a system that provides several types of beer using a single small dispenser, to food services outlets.

As for non-alcoholic beverage, it will focus marketing efforts on core brands, such as Gogo-no-Kocha (black tea), Nama-cha (green tea), and FIRE (coffee), while beefing up its offerings of sugar-free beverages that provide health benefits.

Overseas operations

Outside of Japan, it aims to grow brand equity of its beer products in the growing categories in the Australian beer market while establishing its premium crafted beverage business in craft coffee and kombucha.

Elsewhere in Myanmar, it will increase the presence of its leading brands – Myanmar Beer and Andaman Gold by scaling up production and logistics networks. 

Besides beer and beverage businesses, Kirin hopes to achieve “outstanding growth” ​and global expansion from its pharmaceutical arm, Kyowa Hokko Kirin.

To do so, it will optimise global operations by revamping its organisational structure, and develop new products for the global market. 

Related topics: Markets, Beer, Wine, Spirits, Cider, Beer

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