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The History of Kirin Pursuing Quality Rather Than Quantity after the Oil Crisis(1973-1980)

In the early 1970s, soaring prices of a variety of consumer goods affected Japanese consumers. A series of price increases by beer companies came under legislative scrutiny as lawmakers suspected that it was a collective attempt by large beer companies to fix prices in a market they dominated. Kirin Brewery, which had more than 60% of the beer market at the time, came under particularly intense public fire. When it was recommended in 1973 that the Anti-Monopoly Act be amended to empower the Fair Trade Commission to order a market-dominating company to be split, Kirin Brewery faced a possible breakup. The first oil crisis in the autumn of 1973 ended the era of fast economic growth in Japan, setting off waves of price increases across a wide range of goods and services, which provided a strong argument for the need to amend the Anti-Monopoly Act.

Countering the pro-breakup argument, Kirin Brewery maintained that the company had come to take a dominant share of the beer market only as a result of historical development and industry dynamics, and that its market position did not have any adverse effect on the market itself. In the meantime, in an attempt to curb its market-share gains, Kirin Brewery shifted its priorities from quantity to quality to become more deeply committed to delivering high-quality products to customers while cutting back on spending on expanding production and on advertising. Nevertheless, in 1976, the company resumed running beer advertising and launched the Mein Bräu beer, characterized by its high alcohol content and rich taste, so as to stimulate the beer market that had grown only 3% annually after the 1973 oil crisis. The amendment to the Anti-Monopoly Act finally became effective in 1977, which included a provision that forces a market-dominating company to split up only if its dominant position is found to have an adverse effect on the market, such as creating a barrier for other companies to enter the market. This was not the case with Kirin Brewery—it was spared from a breakup.

Kirin Brewery aggressively went after new business opportunities in non-beer categories to sustain growth. While developing and expanding soft drink and whisky businesses, the company entered into a food business in the first phase of diversification. Kirin Brewery co-established Koiwai Dairy Products Co., Ltd. with Koiwai Farm, Ltd. in June 1976, which started marketing cheese, butter and other dairy products nationally in October that year.

Mein Bräu from 1976
Koiwai-branded dairy products from 1976

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© 2007 Kirin Holdings Company, Limited.

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