JAPAN – Japanese beverage holding company, Asahi Group, has established Asahi Global Procurement Pte. Ltd., a wholly-owned subsidiary in Singapore, aimed at enhancing the Group’s procurement function.
The subsidiary is set to commence operations in January 2024 and will focus on driving global procurement initiatives for the entire Asahi Group.
Asahi Global Procurement will integrate the Asahi Group’s global, regional, and local procurement functions.
The newly established company will also consolidate category management and sourcing activities for items that can be globally managed (preselected raw materials, packaging material including indirect products and services) and where synergies are through a Group-wide procurement approach.
With the transition, more than 90% of the Group’s total third-party spending is expected to be managed directly by Asahi Procurement, together with integrated regional and local procurement teams, with Asahi Global Procurement Pte. Ltd.
They will strategically be leading and actively influencing approximately half of the total third-party spending for the entire Group. Previously, procurement activities have been conducted separately for each region and country.
Asahi Procurement is aiming to generate at least USD100 million per year on average in procurement savings over a five-year period starting from 2024, through cost savings and improved cost control effect, including mitigation of potential cost increases in the future.
By integrating the current Asahi Group’s procurement teams into one Asahi Procurement function, the company expects to increase the efficiency and productivity of the entire function while improving the overall functional capability in line with best-in-class standards for modern Procurement organizations.
Meanwhile, Asahi has pointed out that business performance is recovering owing to the expansion of on-trade sales and the growth of core brands, especially in Japan.
In the financial results of the second quarter of 2023, for the period of January 1 to June 30, the brewer reported that revenue grew by 5.8% YoY as revenue increased in all regions, mainly attributed to unit price increases driven by premiumization and price revisions.
The group’s core operating profit increased by 9% YoY, while in its headquartered country, Asahi posted a core operating profit growth of 23.7% YoY, attributing the rise to the expansion of on-premises and the growth of core brands as businesses performance in Japan recovers.
“In the first half of the year, we made a steady growth of revenue and core operating profit, mainly attributed to enhanced average selling prices through the implementation of prudent pricing strategies,” said Atsushi Katsuki, president, and CEO, of Asahi Group Holdings.
“Even in this environment of severe cost pressures, the Asahi Group continues to maintain and expand its competitive advantage in each region, as well as increase profitability. Fueled by the liquor tax revisions in October this year, we will accelerate the growth of the beer category, including the launch of new products.”
Excluding its home market of Japan, Asahi Super Dry, the company’s hero product, “saw a +24% year-on-year growth in sales volume, mainly due to sales expansion in major markets in Asia, Europe, and Oceania.”
Asahi now expects core operating profit to broaden by +3.2% year-on-year against its initial forecast at the beginning of the year. On an actual currency basis, core operating profit is also set to rise by +4.2% year-on-year.