Heineken feels "uncomfortable" with Kirin stake
Ah, the promiscuity of brewers: in bed with each other in one place, in competition in another. What’s wrong with having an open relationship? If it suits the brewers, fine. Who are we to object?
Given that brewers have behaved like serial philanderers for so long it still comes as a bit of a surprise that one brewer has actually taken the moral high ground against such widespread naughtiness.
Heineken’s half year results presentation on 23 August 2011 saw a concerned-looking Heineken CEO complain to analysts about Heineken’s involuntary menage à trois with Kirin and Fraser & Neave (F&N).
In July 2010 Japan’s Kirin bought a 15 percent stake in F&N, the largest beverage company in Singapore and Malaysia.
There is nothing untoward in that, except that F&N has a long-standing joint venture with Heineken – Asia Pacific Breweries (APB). APB has interests in more than 20 breweries in 13 countries in the Asia-Pacific region.
Prior to the results presentation, in an "exclusive" with the Financial Times, Heineken’s CEO Jean-François van Boxmeer broke his public silence for the first time and said that Heineken felt uncomfortable with Kirin owning a stake in F&N because Heineken and Kirin are competitors in a number of markets.
Mr van Boxmeer added that of course there were "control mechanisms" in place like the Kirin representative on F&N’s board leaving the room when issues relating to APB were being discussed.
Mr van Boxmeer, shrewdly, would not be drawn on how to solve this situation but the Financial Times found an analyst who filled in the bits Mr van Boxmeer had left unsaid:
"Clearly what you have got here is a situation that cannot stay forever", Ian Shackleton, drinks analyst with the Japanese bank Nomura, commented.
Funny he should say that. When earlier this year Belgian brewer Duvel appointed Alain Beyens, CEO of the central European brewer StarBev, to its board – a move BRAUWELT International thought highly unusual at the time because Duvel and StarBev are competitors in the Czech Republic - bankers in London did not think the arrangement unkosher at all, since Mr Beyens would leave the board room when matters relating to the Czech Republic were discussed.
If the Duvel board members can be cavalier about trifling matters such as competition, why can’t F&N’s board members?
What we find interesting is that Heineken views Kirin as a competitor. That’s news to us. Could that be the same Kirin that brews Heineken in Japan? To press further, could that be the same Kirin with whom Heineken may soon be obliged to set up a joint venture in Brazil, if the two want to get anywhere with their respective beer interests, minuscule in market share that they are? In Brazil Kirin has a stake in Schincariol whereas Heineken/Kaiser owns FEMSA.
Whatever Kirin is to Heineken – it isn’t all that clear-cut. Remember they are partners in Japan and Australia, but competitors in New Zealand and Indonesia.
Heineken’s dealings with Kirin change from market to market. That’s why it’s a bit rich coming from Heineken that Kirin is their competitor.
What we find even more interesting is to muse on the reasons for Heineken telling us its side of the story. Is it perhaps to cajole Kirin into committing itself to something more regular, like a French-style "cinq à sept" (five to seven pm) affair?
Mr Shackleton certainly thinks this is where they should take their relationship. He told the Financial Times that there was also a possibility for the two to embrace a broader partnership.
But like any experienced relationship counsellor, Mr Shackleton feels that Kirin may not be ready for a serious relationship.
"Are Kirin ready to work with a global partner rather than just piecemeal in [certain] markets?" he asked.
