Kirin to shut two breweries in ’10

Kyodo News

Kirin Holdings Co. said Monday it will close two out of 11 domestic breweries before the end of 2010 to boost production efficiency in the face of a saturated beverage market.

The move comes as Kirin, Japan’s second-largest beer maker last year, pushes ahead with merger talks with Suntory Holdings Ltd., the No. 3 brewer, to create one of the world’s largest beverage and food companies.

Kirin said it is aiming for an operating profit of ¥188 billion on consolidated sales of ¥2.49 trillion by 2012. For the current year through December, the company anticipates an operating profit of ¥125 billion on sales of ¥2.3 trillion.

The company said it will close a brewery in Tochigi Prefecture and one in Ishikawa after the peak production period next summer.

Of the approximately 330 workers employed at the two plants, Kirin said it will reassign permanent employees to other facilities while the contracts of around 100 temporary workers will not be renewed.

Kirin President Kazuyasu Kato emphasized the forecasts and the restructuring of the plants do not take into account the planned merger with Suntory, adding that the shutdown will help to “rectify the discrepancy between sales and production capacities” of existing breweries.

Kirin, which knocked Asahi Breweries Ltd. out of the No. 1 slot during the January-September period, has been aggressively buying foreign firms in recent years, including Australia’s top two dairy firms, National Foods Ltd. and Dairy Farmers Ltd.

The merger talks with Suntory are taking place against the backdrop of the shrinking domestic beer market, with shipments of beer and beerlike drinks in the first nine months of the year dropping 2.4 percent from a year earlier, the lowest figure since comparable data was first compiled in 1992.

“We are seriously and candidly carrying out talks, so we have no intention of wasting time,” Kato said when asked about the progress of discussions with Suntory.