Japanese beverage company Kirin Holdings is in talks to invest $70 million in craft beer maker Bira, four sources told Reuters, doubling its burgeoning South Asian market at a time when its home is under growth pressure.
Kirin, who first invested $30 million in Bira last year at a stake of less than 10%, plans to pump in the additional funds at a stock valuation of $450 million, the sources said. Negotiations between the Japanese company and the owners of Bira are in their final stages, one of the sources said.
The latest deal talks come as Japan’s major beverage makers face a steady decline in revenues from alcohol sales as the domestic population shrinks and younger people drink less than in previous decades, forcing the companies out of business. expand abroad or enter new markets.
Kirin’s plan for additional investment in Bira comes even as the Japanese yen has fallen to its lowest level in 24 years, which will increase the cost of overseas acquisitions for local companies.
Founded in 2015, Bira is one of India’s most popular craft beer makers. It competes with international brands such as Carlsberg and United Breweries, owned by Heineken, in India’s estimated $5 billion beer market.
According to two of the sources, Kirin would have a total stake of about 15% in Bira once the latest financing round is completed.
Japan-based financial firm Mitsubishi UFJ Financial Group is also in talks to join the round with a $15 million investment, the sources added.
Bira CEO Ankur Jain declined to comment on this article. Kirin and MUFG also declined to comment. The sources were not named as the deal talks are private.
North America has been an area of focus for Japanese beverage manufacturers. Kirin has a stake in Brooklyn Brewery in New York and her subsidiary owns US-based craft beer makers New Belgium Brewing and Bell’s Brewery. Rivals Asahi and Suntory are looking to expand into the North American beverage market.
The new planned investment in Bira “is a small amount, but Kirin is optimistic about India,” the first source said, adding that Keisuke Nishimura, a senior director of Kirin, recently visited India to assess the retail market and Bira’s breweries, and Bira’s CEO Jain visited Japan in recent weeks to meet with Kirin’s management.
Talks about the new financing come at a critical time for Bira, especially after sales plummeted during the COVID-19 pandemic.
While Bira’s net sales were 132% higher at $20 million in the quarter to June 2022, it reported an operating loss of $4 million over the period, according to an internal investor presentation seen by Reuters.
The quarter was the “highest ever” in terms of beer volume, and revenues for Bira were “more than 2x higher than pre-COVID,” the presentation said.
Craft beer sales are increasing in India as younger, affluent consumers in major cities are choosing brands and pubs that make lighter brews and promise fresher ingredients.
With five breweries in India, Bira says the beer is available in 500 cities in 15 countries.
Bira, the first source, would use the money raised in the latest round to open new breweries and launch new products such as ciders.
Two of the other sources told Reuters that Bira was also considering listing on the stock exchange, but that it would take at least another two years.
(Reporting by Aditya Kalra in New Delhi, M Sriram in Mumbai and Rocky Swift in Tokyo; edited by Muralikumar Anantharaman)