INDIA – Japanese beverage giant Kirin Holdings is finalizing talks to invest US$70 million in Indian craft beer maker Bira 91 (Bira), doubling down on the fast-expanding South Asian market at a time when it is facing pressure on growth at home.
Four sources of Reuters said Kirin, which first invested US$30 million in Bira for an under 10% stake last year, is set to pump in the additional funds at an equity valuation of US$450 million.
Negotiations between the Japanese company and Bira’s owners are in the final stage, one of the sources said.
Since its inception in 2015, Bira 91 has grown to be one of India’s most popular craft beer makers, competing with international brands such as Carlsberg as well as Heineken-owned United Breweries in India’s estimated US$5 billion beer market.
According to two of the sources, Kirin would have a total stake of roughly 15% in Bira once the latest funding round closes.
The two sources noted that Bira was also considering a stock market listing but maybe after two years after the new signing is through.
The new planned Bira investment “is a small amount, but Kirin is bullish on India,” said the first source, adding that Keisuke Nishimura, a senior Kirin executive, visited India recently to assess the retail market and Bira’s breweries, and Bira’s CEO Jain in recent weeks visited Japan to meet the Kirin management.
The first source confirmed that Bira would use the funds raised in the latest round to open new breweries and launch new products such as ciders.
Kirin’s plan for additional investment in Bira comes even as the Japanese yen has fallen to 24-year lows, which is set to raise the cost of overseas acquisitions for local companies.
This plan to invest in foreign firms may be due to a steady decline in revenue from alcohol sales as the domestic population shrinks and younger people drink less than in previous decades, forcing the companies to expand overseas or foray into new markets.
Some market analysts said the talks for the new funding come at a critical time also for Bira, especially after its sales plummeted during the COVID-19 pandemic.
In addition, craft beer sales are on the rise in India as younger, affluent consumers in big cities choose brands and pubs that make lighter brews and promise fresher ingredients.
Although Bira’s net sales revenue in the quarter to June 2022 was 132% higher at US$20 million, it reported an operating loss of US$4 million in the period, according to an internal investor presentation seen by Reuters.
The quarter was the “highest ever” in terms of beer volume and revenue for Bira, which was “more than 2X over Pre-COVID”, the financial report noted.
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