Sapporo shuns China for N America, Vietnam
Friday, 8 January 2010
TOKYO, Jan 7 (Bloomberg): Sapporo Holdings Ltd, Japan's fourth-largest brewer, will focus on expansion in North America and Southeast Asia, where returns on investment will be greater than in China, Chief Executive Officer Takao Murakami said.
"Competition in China is intensifying, and everyone seems to be having a hard time boosting profits," Murakami, 64, said in Tokyo yesterday. "We can't take the risk of entering a market that may give us returns 10 or 20 years later."
Sapporo's rivals are acquiring competitors or combining as Japan's shrinking population cuts demand. The planned merger between Kirin Holdings Co. and Suntory Holdings Ltd., Japan's two biggest beverage makers, would be "threatening," said Murakami, even as he predicted Sapporo will beat its 2009 profit estimate and boost sales by volume this year.
"It's good to start expansion ahead of its rivals in a growing market like Vietnam," said Ichiro Takamatsu, chief investment officer at Alphex Investments Co, a Tokyo-based hedge-fund advisor. "More consolidation may take place" in the industry.
While Japan's demand for beer and similar drinks will probably shrink two per cent this year, Sapporo's sales of the beverages may increase five per cent by volume on increased marketing for the 120-year anniversary of its Yebisu brand, Murakami said.
Sapporo gained 0.6 per cent to close at 530 yen on the Tokyo Stock Exchange. The stock fell 8.9 per cent last year, compared with a 19-per cent gain in the Nikkei 225 Stock Average.
The merger of Kirin and Suntory would create one of the world's biggest beermakers that may challenge market leader Anheuser-Busch InBev NV. Kirin has spent more than $10 billion acquiring rivals in the past 25 months, according to data.
Suntory in November said it bought European drinkmaker Orangina Schweppes.
"Competition in China is intensifying, and everyone seems to be having a hard time boosting profits," Murakami, 64, said in Tokyo yesterday. "We can't take the risk of entering a market that may give us returns 10 or 20 years later."
Sapporo's rivals are acquiring competitors or combining as Japan's shrinking population cuts demand. The planned merger between Kirin Holdings Co. and Suntory Holdings Ltd., Japan's two biggest beverage makers, would be "threatening," said Murakami, even as he predicted Sapporo will beat its 2009 profit estimate and boost sales by volume this year.
"It's good to start expansion ahead of its rivals in a growing market like Vietnam," said Ichiro Takamatsu, chief investment officer at Alphex Investments Co, a Tokyo-based hedge-fund advisor. "More consolidation may take place" in the industry.
While Japan's demand for beer and similar drinks will probably shrink two per cent this year, Sapporo's sales of the beverages may increase five per cent by volume on increased marketing for the 120-year anniversary of its Yebisu brand, Murakami said.
Sapporo gained 0.6 per cent to close at 530 yen on the Tokyo Stock Exchange. The stock fell 8.9 per cent last year, compared with a 19-per cent gain in the Nikkei 225 Stock Average.
The merger of Kirin and Suntory would create one of the world's biggest beermakers that may challenge market leader Anheuser-Busch InBev NV. Kirin has spent more than $10 billion acquiring rivals in the past 25 months, according to data.
Suntory in November said it bought European drinkmaker Orangina Schweppes.