Kirin ties up with craft brewer Yo-Ho
If BrewDog can open a bar in Tokyo – they did so in March 2014 -, something must be underfoot in this market. Although the big four brewers Kirin, Asahi, Sapporo and Suntory combined probably control 99 percent of all beer sold nationally, craft beer is gaining in popularity. The country’s 200 craft brewers presently account for 1 percent of overall beer sales in Japan, but the percentage is expected to increase to 2 to 3 percent by 2020.
This must have alerted Kirin, Japan’s number two brewer, to the idea that buying into an established craft brewer would help them learn the business of craft beer in order to counter a declining share of a shrinking market.
In September 2014 Kirin acquired a 33.4 percent stake in craft brewer Yo-Ho, based in Nagano Prefecture, handing over about 1 billion yen (USD 9.12 million) to its owner Hoshino Resort, an operator of luxury hotels. The size of the stake is meaningful as it gives Kirin veto rights on board decisions.
Set up in 1996, Yo-Ho is one of the major craft brewers in Japan, best known for its Yona Yona Ale and other unique offerings.
Kirin said that Yo-Ho’s beers are popular with women in their 20s and 30s, who don’t seem to mind forking out about 280 yen (USD 2.70) for a 350 ml can of its beers, which is more than twice the amount for a Happoshu or “third-category” beer.
Under the partnership, it was reported that Yo-Ho will outsource some of its beer production to Kirin to streamline logistics and material procurement. It will maintain management control, and Kirin will not send any executives to oversee the partner, seeking instead to have young employees learn the ins and outs of online promotion and product development from Yo-Ho.
The Japanese beer market has been shrinking, with beer sales dropping for nine consecutive years to 57 million hl in 2013 from 63 million hl in 2005, according to the Barth report. By contrast, Yo-Ho has had nine straight years of revenue gains since 2005. Media say that in 2013 it produced about 30,000 hl beer.
Media also report that Kirin’s push into craft beer is underlined by its decision to open microbreweries in Tokyo and nearby Yokohama in March next year, with on-site pubs offering nearly 20 types of beer made with traditional ingredients and methods. Not enough, Kirin plans to set up a wholly owned company in January called Spring Valley Brewery to run the microbreweries and pubs, because a dedicated subsidiary will be able to adapt quickly to changing consumer tastes, executives say.
