Myanmar: Investment Commission approves joint venture between Kirin Holdings and Mandalay Brewery

The Myanmar Investment Commission (MIC) has approved a proposal by Mandalay Brewery, which is a subsidiary of Myanma Economic Holding Limited (MEHL), to operate a joint venture (JV) with Japanese brewer Kirin Holdings, The Myanmar Times reported on September 7.

Under the JV, US$9 million will be invested to upgrade the quality of machinery and beer at Mandalay Brewery, said U Hla Myo, general manager of the planning department of the MEHL.

Kirin will invest US$4.3 million for a 51 percent stake of the JV while the MEHL is taking 49 percent, which covers the existing machinery, factory and land.

Mandalay Brewery, which is the oldest and most iconic in the national market, has merely the capacity of 99,000 hectolitres per year and the production rate is around 50,000 hectolitres last year.

In fact, Kirin had planned to invest in Mandalay Brewery much earlier. “When Kirin talked with the MEHL about Myanmar Brewery Limited [MBL] about a few years ago, Kirin also discussed the possible investment in Mandalay Brewery to create synergy between the two companies. But Kirin focused on managing MBL first,” Hiroshi Fujikawa, vice chair of Myanmar Brewery Limited, told The Myanmar Times in February.

Kirin first bought a 55pc stake in Myanmar Brewer, which produces Myanmar Beer, in August 2015. Myanmar Beer enjoys the largest share of the country’s beer market.

The Japanese brewer bought the stake from Singapore-listed drinks maker Fraser and Neave (F&N) for US$560 million after a drawn-out ownership dispute between F&N and military-linked MEHL. F&N is controlled by Thai Beverage, which brews Thailand’s iconic Chang beer.

U Hla Myo said MEHL has since bought a 4pc stake in Myanmar Brewery from Kirin for US$40 million. “Now we have a 49-51 stake ratio for Myanmar Brewery as well,” he said.

The move comes as competition in the Myanmar beer market is heating up. While Myanmar Beer was estimated to dominate a 64pc share of the market in 2014, according to a report by research consultancy Euromonitor International, other brewers have been putting up a good fight.

Heineken and Carlsberg beers have also hit the market. The two brewers have each built their own breweries on the outskirts on Yangon.

In Myanmar, Carlsberg brews its flagship beer as well as Tuborg and Yoma. Meanwhile, Heineken also brews its flagship beer as well as Regal Seven, ABC Stout as well as Tiger Beer, which the Dutch company now brews after it bought Asia Pacific Breweries (APB) from F&N in 2013.

Since buying its stake in Myanmar Brewery, Kirin, too has launched several new brands in Myanmar, including Myanmar Premium, Kirin Ichiban and Black Knight Stout.

Myanmar’s beer market is attractive as it has one of the lowest beer consumption rates in ASEAN, with per capita annual consumption of five liters, compared with 31 liters in Thailand and 36 in Vietnam, according to Heineken.

In its report, Euromonitor also predicted that Myanmar's beer market could be worth US$675 million by 2018, compared to US$375 million in 2015.

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