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June 15, 2005
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Kirin
Group and Yakult Honsha to Form Business Alliance
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Tokyo, June 15, 2005-Kirin Brewery Company, Limited ("Kirin
Brewery"), Yakult Honsha Co., Ltd. ("Yakult Honsha"), and Kirin Beverage
Corporation ("Kirin Beverage") today signed a memorandum of agreement
to form a business alliance within Japan centering on health foods
and functional foods1.
| 1 |
Refers
to standard processed foods that have had particular ingredients
fortified to appeal as functional foods, and to various types
of health-promoting foods. |
The new alliance represents the progression of a business collaboration
begun in 2003 between Yakult Honsha and Kirin Beverage, under which
the two companies have been selling each other's products in their
vending machines. The three companies in the new agreement share an
expectation that by broadening the alliance between Kirin Group and
Yakult Group, the companies can become more responsive to changes
in the longer-term business environment, and create additional value.
Kirin Group and Yakult Group both position "food and health" as an
important business area, and have developed beverages, foods and pharmaceutical
operations. By making use of the research and development capabilities
that the two groups have gained through their beverage, food, and
pharmaceutical businesses, they will jointly endeavor to develop next-generation
health foods and functional foods business. Moreover, in their existing
beverage and food businesses they will begin reciprocal use of manufacturing
and distribution functions as well as strengthen the current vending
machine business collaboration between Yakult Honsha and Kirin Beverage.
In support of the new business alliance, Kirin Beverage acquired
1.40% of the outstanding shares of Yakult Honsha for approximately
¥5.0 billion. Yakult Honsha acquired 0.44% of the outstanding
shares of Kirin Brewery for approximately ¥4.5 billion, and
also acquired 0.36% of the outstanding shares of Kirin Beverage for
approximately ¥0.5 billion.
| Key
aspects of the business alliance |
| 1. |
Joint
operations in the growth areas of health foods and functional
foods |
| 2. |
Increased
efficiency in existing beverage and food areas through
the sharing of manufacturing and distribution functions |
| 3. |
Further
strengthening of the existing vending machine business
collaboration between Kirin Beverage and Yakult Honsha |
| 4. |
Establishment
of a business alliance promotion structure by the three
participating companies |
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Details regarding
each of these points are as follows.
1. Joint operations in the growth areas of health foods and functional
foods
The market for health foods and functional foods is expected to grow,
supported by heightened consumer interest in health and an aging society.
Kirin Brewery is currently pursuing health food operations through
Kirin Well-foods Co., Ltd., marketing products primarily through drug
stores and mail order sales channels. Yakult Honsha has a strong food
ingredient development capability centered on lactic acid bacteria,
and utilizes a proprietary door-to-door 'Yakult Lady' sales system
based on a network of regional sales companies. Yakult Honsha is also
developing its sales to volume retailers. Kirin Beverage has an extensive
sales network that includes volume retailers, convenience stores,
vending machines and drug stores, and is developing products in the
area of beverages for health-conscious consumers.
Under the new alliance, the companies will undertake joint research
and development in areas such as functional ingredients to develop
products based on the theme of "food and health". The companies will
seek to expand sales of products through the shared use of their sales
channels, and may consider establishing a joint operating company
as they work to create a powerful value chain.
Currently, preparation is in progress to commence sales of Kirin Well-foods'
health products through the Yakult Lady network, and the companies
will investigate selling Yakult Honsha health drinks through Kirin
Group sales channels.
Kirin Group's long-term vision is to provide people with the happiness
of food and health, and this new alliance supports the Group's efforts
to develop health foods and functional foods as a business pillar
alongside alcohol beverages, soft drinks, and pharmaceuticals. Yakult
Group is aiming to strengthen its business while expanding its sales
channels by utilizing the strong technical knowledge and experience
it has gained through its core health food and functional food business.
2. Increased efficiency in manufacturing and distribution
Under the agreement, the companies will seek to increase business
efficiency and competitiveness by realizing manufacturing and distribution
synergies, adopting initiatives such as outsourcing manufacturing,
sharing logistics functions, and improving the distribution efficiency
of chilled and dry products. One such initiative that has already
been implemented is the production of Yakult brand products at Kirin
Beverage subsidiary Koiwai Dairy Products' Tokyo plant, which began
in June 2005.
3. Further strengthening of the existing vending machine business
collaboration
Yakult Honsha and Kirin Beverage will work to develop their brands
by extending their existing collaboration regarding the reciprocal
sale of each other's products in vending machines. The current agreement
includes arrangements such as those in which Yakult sales companies
handle the operation of Kirin Beverage's vending machines in certain
areas, and Kirin Beverage handles the maintenance of certain vending
machines owned by Yakult. By expanding this kind of collaboration
the companies aim to further improve their vending machine businesses.
4. Establishment of a business alliance promotion structure
Each company in the agreement will appoint a business alliance
promotion head, who is able to reflect management decisions and facilitate
smooth and rapid progress in developing the business alliance. Through
this business alliance, Kirin Brewery, Yakult Honsha and Kirin Beverage
aim to contribute to the health and happiness of their customers,
and create new value in the area of 'food and health'.
The new business alliance applies only within Japan, and will have
no impact on existing business alliances between any of the three
companies with other parties.
Attached: Overview of participating companies and diagram of
alliance structure |
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