Heineken dissolves Japanese joint venture with Kirin Holdings

JAPAN – Dutch brewing company Heineken has resorted to taking a solo path in Japanese consumer sales starting next year after over three decades of trading in Japan under a joint venture with Kirin Brewery.

In the new business move, Heineken will convert the joint venture, Heineken Kirin, into a wholly owned subsidiary and will be known as Heineken Japan, from April 2023.

Under the joint venture, launched in 1989, Kirin handled sales of canned and bottled Heineken for the consumer market. Heineken will take over that role once the joint venture is dissolved while Kirin will continue to brew beer under the Heineken brands and sell it to commercial customers.

Kirin also announced plans to rework its relationship with Heineken and focus on boosting sales of craft beer. The announcement follows an investment in Indian craft beer producer Bira 91 that enabled the craft brewer to raise US$70 million in a series D funding round.

Kirin, which first invested US$30 million in Bira for an under 10% stake last year, was set to pump in the additional funds for an around 15% stake at an equity valuation of US$450 million.

Last year, Heineken sold 690,000 cases of beer in Japan, with the consumer market accounting for 70% to 80% of the sales volume.

After facing a lot of headwinds this year, Heineken plans to raise beer prices where possible next year to offset surging costs for raw materials and energy, particularly in Europe.

The market leader in Europe is also shutting seven of around 50 breweries on the continent and looking for more cross-border cooperation between its national operating companies. It has also reduced its product range and is channeling more marketing into fewer brands.

The world’s second-largest brewer expects a jump in input costs “in the high-teens per hectolitre” next year, along with “significantly higher energy costs, particularly in Europe,” according to a statement to analysts.

The brewer has high hopes for Heineken Silver, a lower alcohol and less bitter version of the original Heineken, which began in Vietnam in 2019 and this year was the biggest launch in Europe of any fast-moving consumer good.

However, it expects stable to modestly growing volumes next year, with increases in developing markets and declines in Europe. Gross savings will probably come ahead of its €2 billion (US2.11bn) target, helped in part by “an increased ambition of savings in Europe.”

The company has allocated US$100 million for Heineken Silver to facilitate the biggest-ever launch of the brand next year in the United States.

At the same time, Heineken’s online beer retailer Beerwulf has teamed up with Mirakl to create Europe’s leading B2C online beer marketplace.

Using Mirakl’s technology and expertise, Beerwulf has revealed it can now expand the online platform internationally as well as offer a bigger product assortment.

Through the marketplace, Beerwulf will provide third-party sellers of all sizes, including established beer sellers and small-scale breweries, with the opportunity to reach Beerwulf’s millions of customers in the Netherlands.

The marketplace will then expand to the UK in 2023, followed by other markets such as Germany, France, and Italy in the coming years.

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