Kirin Beer, Lion Nathan

Australian visitors to Japan who are fond of the amber liquid would likely know Kirin Beer. They would certainly know Tooheys, XXXX and the more boutique Australian brand, James Squire. Few, however, may realise these Australian and Japanese beers have much more in common than taste appeal.

The Kirin Brewery Company is one of Japanﾕs largest alcoholic beverage companies, dating back to 1907. During much of this time, Kirin has battled for top position in Japan's domestic market.

In 1998, as part of an overseas investment strategy, Kirin acquired a 46.1 per cent share in Australiaﾕs second-largest alcoholic beverage company, Lion Nathan Ltd. The acquisition made the Kirin-Lion Nathan partnership one of the world's largest brewery alliances.

Originally a New Zealand company, Lion Nathan has brewing, winemaking and marketing interests throughout Australia. It produces many of Australiaﾕs best-loved beers and imports some others, giving it a 42 per cent share of the country's beer market. Petaluma and St Hallet wines, along with New Zealand's Wither Hills, add to its alcoholic beverage range.

ith steady growth in the Australian economy, Lion Nathan's operating profit has grown to around A$450 million in the last financial year - nearly a quarter of Kirin's overall operating profit.

Lion Nathan has five Australian beer factories. The smallest, the Malt Shovel Brewery (better known as the James Squire Brewhouse) produces premium beers in the relatively modest quantities of about 10 to 15 kilolitres per day. In comparison, its Lidcombe and Brisbane plants brew Tooheys and XXXX beers in quantities of about 1000 kilolitres a day.

Kirin Brewery Company also owns Kirin Australia Pty Ltd, a malt-producing plant exporting high quality malt for Kirin beer since 1976. Initially set up as a joint venture between a Perth company and Kirin, the plant has grown to produce more than 40,000 tonnes of malt a year for the Japan, south Asia and WA markets.
In 2003, Kirin began brewing the Japanese beer Ichiban in Australia by using Lion Nathan's domestic facilities. Although the mix is identical to the Japanese product, differences in water and production kettles give the Australian-produced Ichiban a distinct taste. With the help of a small Japanese cultural boom in Australia, it has become Lion Nathan'ﾕs third most popular foreign beer.

As a subsidiary of Kirin Brewery Company, the Japanese management of Lion Nathan Ltd highly regard the decisive nature of the Australian business style and the friendliness of its employees.

Since Kirin's 1998 investment, Lion Nathan has gradually increased its sales profit by focusing on premium beer sales - products boosted by a buoyant Australian economy and low unemployment.

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Who's the boss? Interview: Fumio Miki Executive director Lion Nathan Graduating from Hitotsubashi University in 1985, Mr Fumio Miki has worked for Kirin for more than 20 years. He has previously lived in America and is highly experienced in business planning and management. He enjoys books and movies in his leisure time.

jstyle: Please describe your company and its achievements.

Mr Miki: Our operation includes brewing beer, winemaking, marketing and distributing alcoholic beverages in Australia and New Zealand. We are responsible for some of Australia's most popular names in beer such as Tooheys, XXXX Gold and Bitter, Hahn Premium, Becks and Heineken. We (Lion Nathan Ltd) employ about 2800 people.

What are some differences between the Australian and Japanese markets for beer?
In Japan, new types of beer are frequently developed and brewed for each season. They constantly hit the stores in order to compete and differentiate against competitors. In Australia on the other hand, there is strong loyalty to established beer names - especially across different regions. For example, Queenslanders like their XXXX while people in NSW like Tooheys and Victorians their VB. Beer sales don't fluctuate as readily as in Japan. We have maintained our market share quite consistently but have achieved growth in profits through the sale of premium beers.

What differences have you observed between business in Australia and Japan?
Compared to Japan, I think the business is more short-term driven in Australia. This obviously poses a problem if companies aren't prepared for the future, but it means decisions are made very quickly and action is executed swiftly. In Japan, goals may be more future-orientated but it also means decision-making is a painstakingly slow process. Perhaps the best practice is somewhere in the middle...

What are some of the challenges faced by your company?
Although the Australian economy has been very good over the last decade, we cannot assume this will continue forever. We predict that a decline in the economy will have adverse affects on the sale of premium beer. As such, we have been focusing on the development of Ready To Drink brands. RTDs are pre-made drinks that are a mix of alcohol and other beverages such as citrus juice or soft drinks. We have established ventures with Bacardi and have also launched McKenna Bourbon in order to enter into new markets with profit potential.

What are the plans for the future?
In the immediate future, we are planning on relaunching the Japanese beer Ichiban that was initially released in 2003. The reason we are doing this is to give Ichiban a look that is more suitable to the Australian market and also in line with the rise in popularity of the Japanese culture recently. Many Australians go on holidays to Japan and the Kirin brand is gaining exposure as a result. We are hoping the relaunch of Ichiban will capture a greater segment of Australian beer drinkers. This is something of a breakthrough for Kirin as most Kirin beers sold overseas are marketed towards the Japanese population of those countries. Only in Australia are we going to market it towards the local people.