Heineken, the world’s second-largest brewer, agreed on Monday to buy the loss-making Brazilian breweries of Japan’s Kirin Holdings, boosting its presence in the world’s No. 3 beer market.
The Dutch brewer will become the second largest beermaker in Brazil, with a share of about 19 percent, behind market leader Anheuser Busch InBev. Including debt, Heineken said it would pay 1.025 billion euros for Brasil Kirin.
For Kirin it marks a departure from the Brazilian market, having paid some $3.9 billion in 2011 for 12 breweries, a business which has subsequently lost market share and seen raw materials costs rise due to a weak currency and rampant cost inflation.
Kirin said that Brazil’s economic risks and a stagnant and competitive beer and soft drink market meant there were “limitations” to making Brasil Kirin profitable. Kirin said the unit made an operating loss of 284 million reais in 2016.
Brazil’s economy is set to enter a third year of recession in 2017, but Heineken said that the nation’s beer market was attractive in the longer term, with a premium segment growing faster than the market as a whole.
The acquisition will increase Heineken’s presence in the north and northeast of Brazil, allow it to boost sales of the premium lagers Heineken and Sol and yield cost savings.
Full Content: Fortune
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