Japan: The Japanese beer market would probably shrink this year and Japan’s brewing force, Asahi Breweries, would continue to expand abroad, focusing on China and other markets in Asia, to counter the slowdown at home, Kouichi Ikeda, president of Asahi Breweries, said on January 7, according to Bloomberg News.

Asahi, Japan's biggest beer maker, expects the domestic market for regular beer, which accounts for about two-thirds of consumption, to fall by as much as 6 % this year, Ikeda said in Tokyo. He predicted that the smaller market for cheaper, low-malt brews, would expand by 6 %. The domestic market for Asahi and Japan's other beer makers, including its largest rival, Kirin Brewery, has slumped as a result of a weak economy and an increase in liquor taxes.

The company said on January 5 that it agreed with Itochu, Japan's third-largest trading company, to buy half of a China soft drinks venture from Tingyi (Cayman Islands) Holding for as much as $423 million to tap demand in China. "It's a major purchase, an investment in the future of Asahi," said Ikeda.

Asahi, which also owns 60 % of a soft drink venture with Tsingtao Brewery, China's biggest brewer, is building a new brewery in Beijing that is due to begin operating in April. Asahi's beer business in China, which includes partnerships with five local companies, should begin making a profit within three years, Ikeda said.

Beer consumption in China rose 4.7 % by volume in 2002, twice the global average of 2.1 %, making it the world's second-largest market, according to Kirin.

China accounted for 16.6 % of the 141.6 million kiloliters, or 37.4 billion gallons, of beer consumed globally in 2002, ranking behind the U.S. with a 16.8 percent share. Japan ranked fifth with 4.9 percent share.

Asahi expects its own domestic shipments, including low-malt and regular brews, to rise 0.5 percent to 2.6 million kiloliters this year after falling 2.6 percent last year because an unseasonably cool summer and higher beer taxes cut demand. The company expects shipments of low-malt brews to rise 17.2 percent and regular beer shipments to fall 5.5 percent this year.

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