Japan & South Korea: Asahi admits South Korea’s boycott of Japanese goods affecting its beer sales

Asahi Group Holdings said on August 1 the spread of the South Korean consumer boycott of Japanese goods was affecting its beer sales as it lowered its profit guidance slightly, while also citing the yen’s rise against the euro and Aussie dollar, Reuters reported on August 1.

“We cannot deny there’s been a slight impact,” Chief Financial Officer Atsushi Katsuki told reporters. “That has been included somewhat in the outlook.”

Asahi lowered the forecast for its full-year operating profit to 215.5 billion yen ($1.97 billion) from a previous guidance of 217 billion yen, mainly due to currency moves.

Tensions between Japan and South Korea have intensified since a South Korean court last year ordered Japanese companies to compensate Koreans who were forced to work for Japanese occupiers during World War Two. In July, Japan restricted exports of high-tech materials to South Korea.

South Korea buys 61% of Japan’s beer exports, spending 7.9 billion yen ($73 million) in 2018 for the shipments. Asahi Super Dry is the most popular import brand in South Korea, with sales tripling in the past five years, according to Euromonitor.

Asahi is looking overseas for growth amid a shrinking domestic population. Last month it announced that it was buying Anheuser-Busch InBev’s Australian subsidiary Carlton & United Breweries (CUB) for $11 billion, its biggest deal ever.

Katsuki said it was not overpaying for the Australian assets, saying deal valuations of around 15-16 times EBITDA were now common in the industry. AB InBev has said the latest deal represented a multiple of 14.9 times EBITDA.

“We were able to make this acquisition at a reasonable price,” he said.

While Japanese companies are often seen as paying premiums for overseas acquisitions, Katsuki said this did not apply to Asahi as its past experience made it a “formidable” player.

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