New Asahi CEO sees post-pandemic bounce in Super Dry beer demand

Even after losing domestic market share to rivals and seeing profits drop 30% last year, Asahi Group Holdings Ltd.’s new chief executive officer thinks its flagship Super Dry beer can break into the top 10 of global brews by 2030.

The goal, which would mean vaulting up from its current No. 19 spot in terms of volume, is achievable through a focus on urban drinkers in Europe and China, and a return to normalcy in the near future with vaccinations, said Atsushi Katsuki, 61, who took the reins at Asahi last month.

“It may take a few years, but we think there’s a big opportunity in expanding as a premium, high-end beer in large cities in countries we’re in,” he said in an interview Thursday.

Katsuki predicts that post-pandemic beer consumption will surge due to people’s pent-up demand for socializing — foreshadowed by a year-on-year rise in beer demand in pubs and restaurants when virus restrictions lifted last fall in Europe, and the growth Asahi saw in China through 2020 after the coronavirus was contained there early on.

The pandemic has been tough on Asahi, which counts on restaurants for nearly half of its revenue — a higher degree of reliance on dining out than its rival Kirin Holdings Co. COVID-19 also hit as the company was coming off a spree of over $20 billion worth of acquisitions to grow its overseas business, buying up brands such as Peroni, Pilsner Urquell and Victoria Bitter under Katsuki’s predecessor, Akiyoshi Koji, who is now chairman of the company.

Super Dry will face a challenge trying to unseat brands in the current top 10, which include global names such as Budweiser and Heineken, plus Chinese beers such as Tsingtao that are powered by the country’s vast population.

The changes that have pressured the global beer industry in recent years have also accelerated due to COVID-19: Consumers are becoming more health-conscious and dining out less. Asahi’s profits fell 30% in 2020 and sales declined 2.6%.

“It’s not guaranteed that Super Dry will get big overseas,” said Hiroshi Saji, an analyst at Mizuho Securities Co. “It will be very important for them to be able to expand the sales in Asia-Pacific and China.”

Created in the 1980s, Super Dry beer helped Asahi become Japan’s top brewer. But the company has recently lost ground domestically to rivals such as Kirin Holdings Co.’s more creative brews and focus on retail sales channels.

Asahi’s overseas operations have grown, making up about half of core operating profit in the latest fiscal year, up from just 10% about five years ago. Its debt ratio has also swelled to six times earnings after the company’s most recent acquisition, an $11 billion deal for Australia’s Carlton & United Breweries in 2019.

The brewer has set a goal of returning debt levels to three-times earnings by 2024, and it is unlikely to pursue more acquisitions before then, Katsuki said.