Doc re 2004 Business Strategy
January 16 2004 - 2:00AM
UK Regulatory
RNS Number:3084U
Kirin Brewery Co Ld
16 January 2004
January 8, 2004
Kirin Brewery Company, Limited
2004 Business Strategy
Kirin Brewery Company, Limited (Koichiro Aramaki, President), has formulated its business strategies for
2004, the first year of the Kirin Group's three-year medium-term management plan.
Overview of 2003
Underpinned by its mainstay alcohol beverage business, Kirin has worked throughout 2003 to reinforce the
Group's management base, pursue low-cost operation and strategic resource allocation. It has promoted
structural reform to create a strong corporate structure capable of delivering concrete earnings and
profits. In alcohol industry, domestic market of beer and happo-shu (low-malt beer) combined declined in
2003, owing to social instability, prolonged slump in consumption and changes in the market environment.
Although sales of happo-shu has fallen slightly impacted by a tax hike, it is estimated that happo-shu
has increased its share to approximately 40% of the total beer and happo-shu market.
Kirin's sales volume of beer and happo-shu for the year decreased by 7.6% from the previous year to
183.2 million cases (633ml large bottles x 20), while sales of low-alcohol beverages* decreased by 4.8%
to 200.3 million cases (large bottles).
*Beverages with alcohol content of less than 10%, including beer, happo-shu and canned chu-hi drinks.
Objectives for 2004
1. Domestic Alcohol Business
The alcohol beverage market in 2004 is expected to expand for happo-shu and canned chu-hi drinks while
consumers' preference between alcoholic categories are expected to become even more borderless. Against
the backdrop of a changing market environment, Kirin will work to improve profitability and believes
that its top priority issue is to enhance Kirin brand value by reinforcing its mainstay product brands.
As a development-and-proposal oriented company, Kirin is committed to delivering new value to its
customers based on its core beer and happo-shu brands.
Priority issues for 2004 :
(1) Reinforce Brand Awareness
* Clarify the position of each alcohol beverage category.
* Work to reinforce brand value in the beer category.
* Secure competitive advantage in the growing happo-shu category.
* Expand business in canned chu-hi drinks, spirits and wines by developing new products that create
new markets.
(2) Enhance Sales and Marketing Structure
* Attain improved profitability through strategic resource allocation to growth areas, normalization
of trade within the industry and reformation of marketing structure.
* Reinforce marketing structure through proposal-based marketing and enhanced area communication to
secure competitive advantage in the non-price competition.
Accordingly, Kirin is targeting sales of 209.3 million cases (large bottles) in the low-alcohol
category, an increase by 4.5% from 2003. Of this, the target for beer and happo-shu combined is 187.2
million cases (large bottles), an increase by 2.2% from 2003. The target for the canned chu-hi drink,
Kirin Chu-hi Hyoketsu, is 40 million cases (250ml cans x 24), an increase by 26.2% from 2003.
(1) Reinforce Brand Awareness
Happo-shu Category
Despite some negative impact from the tax hike on happo-shu, sales of happo-shu to households exceeded
those of beer in 2003. In 2004, year-on-year growth in the happo-shu market is estimated to be around
8%. The beer market being expected to contract, happo-shu is anticipated to further increase its share
of the total beer and happo-shu market. Kirin will continue to reinforce its mainstay Tanrei brands,
promote further market expansion and ensure its competitive advantage in the happo-shu market.
Kirin is working to further strengthen Tanrei brand, projecting energetic and powerful image through
dynamic advertising campaigns featuring members of Japan's national soccer team such as Shunsuke
Nakamura. Catering to health conscious consumers, Kirin is promoting characteristics of individual
brands including Tanrei Green Label and Tanrei Alpha as well as Gokunuma and Namakuro, featuring
quaffable and cost saving concepts. Kirin is constantly working to develop new products that serve to
create new markets. In February it is releasing Kirin Honey Brown, a new happo-shu that combines the
natural ingredients of malt and honey. Kirin is also preparing a nationwide campaign for its mainstay
happo-shu and beer products with sports theme.
Beer Category
Beer is identified to be the flagship category of Kirin, generating the greatest contribution to its
corporate brand. While seeking to increase market share in a happo-shu category, Kirin is working to
enhance brand value in a beer category by making clear the distinctive value of beer that matches
consumers' expectation.
Kirin will launch a new advertisement to promote its Kirin Lager brand, including Kirin Lager Beer and
Kirin Classic Lager. Featuring Ken Hirai, this campaign will emphasize the presence of Kirin Lager in
peoples' communication scenes and reestablish Kirin Lager brand. With the aim to penetrate and establish
the brand, Kirin will also continue its advertisement for Kirin Classic Lager featuring Ken Takakura,
promoting can packages of Kirin Classic Lager that was released nationwide in 2003. On the 15th
anniversary of Ichiban Shibori draft beer, Kirin will launch a renewed Ichiban Shibori, featuring
improved quality and freshness of Ichiban Shibori brand. The renewed Ichiban Shibori will have a
renovated taste, package and will be promoted with a new advertisement featuring Koichi Sato. Kirin will
also continue to develop new products such as Maroyaka Kobo and Latte Stout and work to further
establish a category in the field of high-value chilled beer where Kirin is the market pioneer.
Chu-hi and Other Alcohol Drinks
Kirin will continue to widen its unique lineup of Kirin Chu-hi Hyoketsu to cement its unrivalled
position in this market. In March it will release new flavor Valencia Sparkling, the third product in
the premium fruits series. In addition to development of new products in the growing chu-hi category,
Kirin will also bolster marketing of Kirin Mugi Shochu Pure Blue, another category earmarked for growth.
In wine category, Kirin, with Franzia at the center, will continue to release new products and widen the
lineup. Marketing activities for Chivas Regal scotch and Four Roses bourbon will be stepped up with the
aim of making them even stronger brands. In pursuit of new business, Kirin will continue to promote Malt
Squash in the expanding beer taste beverage category.
(2) Enhance Sales and Marketing Structure
Kirin is redoubling its efforts to clarify its priority markets, focusing in the growing chain retailer
sectors and to normalize trade within the industry. In the beer and happo-shu categories, Kirin will
introduce its proprietary open-pricing system in January 2005. Under this system, recommended wholesale
and retail pricing system is replaced with a single manufacturer's shipping price. In this manner,
logistics companies will be better placed to set prices that more accurately reflect the actual cost of
distribution. Kirin is working to establish an operating environment that maximizes industry-wide
profits through the optimum application of its chilled distribution network. It also works cooperatively
with distributors in an effort to create new value for consumers. In addition, Kirin will enhance its
sales and marketing structure through collaboration with Kirin Communication Stage, strengthen knowledge
management based proposal marketing and cultivate new customers through direct area communication and
better use of the internet.
2. Overseas Alcohol Business and Other Diversified Businesses
In overseas alcohol beverage business, Kirin focuses on Asia and Oceania regions with efforts to realize
greater group synergy and to strengthen performance in core areas, including potential new business
tie-ups. In the beer category, Kirin is promoting Kirin brand beer such as Ichiban Shibori and Kirin
Seijun.
In pharmaceuticals business, Kirin will continue to strengthen efforts in the sale of ESPO (EPO), GRAN
(G-CSF), Rocaltrol Injection and Phosblock Tablets. At the same time, Kirin will push forward with
initiatives to widen its product pipeline, especially in developing KRN321 (NESP), the next generation
of ESPO. In agribio business, Kirin will promote business in China to attain more group synergy while
strengthening business platform in domestic flower business. In nutrient food and feed business, Kirin
will enforce its health foods and seasonings fields. In addition, it will take on the production and
distribution function of new food ingredients to be applied to wide range of foods and beverages such as
Noale produced by Kirin Well Foods and Koiwai KW Lactobacillus Yoghurt by Koiwai Dairy Products.
3. Social Responsibility-Promoting Corporate Social Responsibility (CSR)
Kirin practices its corporate social responsibility in all aspects of operations for the benefit of all
stakeholders. In an effort to reduce environmental impact, it will promote fuel conversion at its plants
for reduction of CO2 emissions, starting with Fukuoka plant in 2004. Kirin will perform number of
initiatives including introduction of biogas and solar energy generation at its facilities. It will also
pursue the idea of introducing wind and hydroelectric power by participating in the green power
verification system. Kirin will continue water preservation and afforestation activities. It will
introducie aTULC, an aluminum can with less environmental impact, to Kirin Lager Beer and Kirin Classic
Lager, while reducing the size of cardboard carton package and promoting systematic change-over of
marketing vehicles into low-impact cars. Kirin ensures group-wide compliance and continues educational
activities to promote responsible drinking. In the area of food safety, Kirin is committed to
consistently improving its product quality management system.
Kirin continues to promote strong ties with the communities surrounding its nationwide plants. It
remains a strong supporter of sports through sponsoring Japan's national soccer team and Olympic
national soccer team. It is active in an attempt to recreate the beer of Ancient Egypt, followed by
research of the beer of medieval monastery.
This information is provided by RNS
The company news service from the London Stock Exchange
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