The move would seek to address declining consumption rates in the domestic market and raise competitiveness abroad. The marketing implications are considerable.
According to market research company Video Research, the two brands have a combined media spend of US$1.1 billion in 2008. Suntory was the biggest spender on $614 million.
“We believe the two might be able to draw out significant synergies in terms of marketing channels and product development,” said Yoshiyasu Okihira, a food sector analyst at Credit Suisse in Japan.
The resulting entity would account for over 50 per cent of the Japanese beer market.
“While the merger might mean pulling the plug for small or unprofitable brands, key brands will gain more exposure,” said Kelvin Chan, research manager at Euromonitor International. “Kirin is currently stronger in beer and wine, while Suntory is strong in spirits such as whisky.”
The two firms’ interests extend beyond alcohol. The consolidation would produce a company comparable to the size of Coca-Cola Japan in terms of soft drinks sales.
Kirin and Suntory are understood to split creative and media accounts for their numerous brands predominantly across Japanese agencies Dentsu, Hakuhodo and Asatsu-DK. Suntory has an in-house ad agency, Sun-Senkousha, in which Dentsu has a 34 per cent interest.
