By Hiroyuki Kachi
TOKYO—Sapporo Holdings /zigman2/quotes/200413497/delayed JP:2501 -6.25% Ltd. said Thursday it will enter Vietnam's lucrative beer market by buying a majority stake in Kronenbourg Vietnam Ltd., becoming the latest Japanese company to look overseas as a shrinking population and a gloomy economic outlook take a toll on its domestic business.
The Japanese beer maker said it will pay about $25 million for a 65% stake in Kronenbourg Vietnam, which is equally owned by Carlsberg Brewery A/S and Vietnam National Tobacco Corp., or Vinataba. Established in 2007, the joint venture between Carlsberg and Vinataba isn't fully operational.
After the transaction, which will be completed as early as January, Kronenbourg Vietnam will change its name to Sapporo Vietnam Ltd. The state-run Vinataba will hold 35% in the joint venture after the deal closes.
Sapporo's exposure to overseas markets has been limited. It had a mere 25 billion yen ($284.5 million) in of sales outside Japan in 2008, even after the inclusion of Toronto-based Sleeman Breweries Ltd., which it bought in 2006. That made up 6% of Sapporo's overall sales in 2008.
Sapporo said the deal marks the first time a Japanese beer maker has obtained a beer-manufacturing and sales network in Vietnam, where beer consumption has been growing more than 10% annually.
Sapporo said the joint venture will construct a plant in Long An Province on the outskirts of Ho Chi Minh City, which is scheduled to start production in early 2012.
The joint venture is aiming to sell 150,000 kiloliters of beer, or 3% of the Vietnamese market share, by 2019. That would translate into billion yen to 11 billion yen in sales.
Sapporo's domestic rivals are also stepping up efforts to increase their overseas presence. Last month, Suntory Holdings Ltd. completed an acquisition of closely held European beverage maker Orangina Schweppes Group.
Suntory is now in merger talks with Tokyo-based counterpart Kirin Holdings /zigman2/quotes/201605850/delayed JP:2503 -1.52% Co., the completion of which would create a beverage giant with sales of 3.8 trillion yen based on 2008 earnings. Kirin owns Australia's Lion Nathan Ltd. and 48% of the Philippines San Miguel Brewery Inc.
Write to Hiroyuki Kachi at email@example.com