Given the headline grabbing news of Suntory acquiring Beam Inc for $16bn today, the second case study on Kirin in the final part of the Nikkei Business’s recent series on Japanese cross border acquisitions will have been read closely by Suntory executives. Suntory through the acquisition has become the third biggest drinks maker in the world, having already acquired Lucozade and Ribena from GSK in and Orangina Schweppes in 2009.
There were talks between Kirin and Suntory in 2010 regarding a possible merger which failed due to an inability to agree on the management and ownership of the merged organisation – Suntory is privately held, and still family run, whereas Kirin is a publicly listed company, belonging to the Mitsubishi group of companies.
Kirin had also been acquiring companies since 2007 when it bought the Australian dairy and beverage company National Foods which then acquired Dairy Farmers. Kirin then aquired Lion Nathan, a major Australian brewers, and formed Lion Nathan National Foods in 2009.
Kirin’s concern was that in a consumer facing industry, simply despatching executives from Japan to run the business would result in marketing and product development that does not suit the local market, so they have delegated a fair amount of authority to the local executives. It was a process of trial and error since 2010, with the acquisition of Brazil’s Schincariol (the second largest Brazilian brewery and beverage company after AmBev) in 2011 proving a turning point.
Kirin promoted the Brazilian COO to CEO with the new board having 3 Japanese and 4 Brazilian members. Schincariol was also still an owner-run company, with each factory managing its own purchasing and warehousing. Kirin could have intervened to standardize but was concerned that they may have made mistakes without local knowledge. So whilst major investments and disposals had to be approved by Japan headquarters, operational decisions were left to the local executives.
Schincariol managed to make Y3bn cost savings by 2012 and doubled their operating profit. At the request of the local staff, they changed the name to Brazil Kirin in November 2012.
Nikkei Business comments “it seems that learning from the company you acquire brings results.”
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