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January 12, 2006
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Kirin
Brewery Company, Limited
Business Approach for 2006
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Win enhanced customer support through improved communication, and target
further progress as we approach our centenary in 2007
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| Report on 2005 |
2005 was the second year
of our medium-term business plan, and in pursuit of our plan targets we actively
implemented initiatives to raise the value of the Kirin brand and become a corporate
group centered around a development and proposal-oriented strategy.
As regards our domestic alcohol business, the market as a whole witnessed rapid
growth in new genre products, which grew to comprise around 16% of the
overall market including beer and happo-shu. At the same time, the overall
market contracted, reflecting the effects of the introduction of open-pricing
in January 2005, a decline in demand following the hot summer in 2004, and other
factors. Against this backdrop Kirin's Nodogoshi, launched in April 2005,
has become a record-breaking hit product, and Kirin's total volume sales of beer,
happo-shu and new genre category products were 178.5 million cases
(up 0.3% from the previous year; 12.66l/case) marking the first year-on-year increase
in seven years. Total volume sales of low-alcohol beverages* including
chu-hi were 196.9 million cases (an increase of 0.1% from the previous
year) showing that in a harsh market environment Kirin is benefiting from strong
support from its customers, outperforming the overall industry, and continuing
to lead the market.
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Alcoholic
beverages with an alcohol content of less than 10%, such as beer, happo-shu,
new genre and chu-hi. |
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| Approach to 2006 |
Basic Groupwide Policies
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In
the last year of the 2004-2006 Kirin Group medium-term business plan, we will
strengthen R&D and product development capabilities, and we will accelerate the
realization of group synergies on a broader front in tandem with our approach
to CSR. Through actively implementing qualitative changes to raise the value of
the Kirin brand we aim to be a strong corporate group that is clearly centered
around a development and proposal-oriented strategy. |
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Strengthening
the core domestic alcohol business is our top priority and, we are aiming to gain
further support as a comprehensive alcohol beverages maker with beer, happo-shu
and new genre products as the main drivers of a dynamic corporate group |
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In
our overseas alcohol business and diversified businesses (pharmaceuticals, nutrient
foods, agribio) we will accelerate moves to build an enhanced platform for growth,
while restructuring our soft drinks business with a focus on enhancing its competitiveness. |
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1. Domestic Alcohol Business
While an alcohol tax revision
is planned for May 2006, we will aim to increase the momentum gained in 2005 and
continue to develop our value proposition. We will maintain our basic policy of
raising the value of the Kirin brand with a development and proposal-oriented
strategy, and further promoting activities directly focused on the customer as
we aim to be the number one company with consumers.
Key Issues
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We
have positioned 2006 as a year of intensified positive action and we will consolidate
our strong leading positions in happo-shu and the new genre category,
while delivering the value that meets customers' expectations in the beer category.
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In
the RTD*(mainly Hyoketsu), shochu, wine and spirits categories we
will aim to win support as a comprehensive alcohol beverages manufacturer through
actively implementing attractive proposals.
* RTDs are pre-mixed
cocktails that are ready to be consumed on opening. The market in Japan has grown
considerably, mainly based on sales of chu-hi in cans. |
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We
will develop a range of attractive proposals for consumers around the theme of
supporting the Japanese teams in the Olympics and soccer World Cup. |
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We
will link the sales organization more closely to regional characteristics by strengthening
its collaboration with local factories and other sites. |
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To
encourage a more stable industry environment we will promote a trading environment
based on a cost plus mind-set |
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As a result of the above, it is expected that the total market for beer, happo-shu
and new genre will reduce by 1% compared to the previous year, while Kirin
will focus on achieving its plan target of 184.8 million cases (an increase of
3.5% year-on-year). Sales targets by each core category are: Beer - 84.2 million
cases (an decrease of 0.2% year-on-year), happo-shu - 61.8 million cases
(a decrease of 6.6% year-on-year), new genre - 38.9 million cases (an increase
of 39.4% year-on-year), chu-hi - 41.7 million cases (an increase of 15.5%
year-on-year; 6l/case). Our total sales target for low-alcohol beverages
is 205.9 million cases (an increase of 4.6% year-on-year).
(1)
Products and Marketing Initiatives
1. Beer
As the diversification of taste preferences continues, consumers
are calling for fuller tastes and also becoming more discerning. By
creating new proposals that meet the expectations of our customers,
we will enhance brand strength. We will demonstrate brand value with
Kirin Lager and Kirin Classic Lager, 'a genuinely great
taste enjoyed through the generations'. Taking food as a theme, we
will be involved in a range of approaches with Ichiban Shibori
Draft Beer, using the 'enjoying the season' value proposal of
unique Japanese tastes as well as commencing sales of the new unfiltered
chilled beer (live yeast products) Muroka, creating new added-value
products. With the Maroyaka Kobo, Hojun and Golden
Hop product lineup, Kirin will offer the rich fragrance and flavor
of chilled beer to the continually growing premium segment and strive
to broaden the market.
Regarding sales to the on-premises marketAwe will strive to
further increase product quality as we aim to realize an even better
tasting draft beer. Furthermore, we will actively demonstrate the
value of distinctive brands such as Kirin Braumeister, Heartland,
Budweiser and Heineken matched to a diversity of outlet
types and environments.
2. Happo-shu
Despite an impact from the new genre category, in 2005 the happo-shu
market became established as a category with firm support in the home
use market. Kirin has been strengthening its initiatives focused on
the Tanrei series, has outshone its peers in winning customer support
and as a result has consolidated its position as the leader in the
happo-shu category. In 2006 it will continue to be treated
as a core category and Kirin will strive to increase brand strength,
focusing on Tanrei Nama, along with Tanrei Green Label,
and Tanrei Alpha. We will also create new value proposals,
and in February 2006 will be launching Kirin Enjuku, to meet
demand for a full body and flavor product.
3. New Genre
In 2005 this market witnessed huge expansion and grew to comprise
16% of the total beer, happo-shu and new genre market.
In April 2005 Kirin launched Kirin Nodogoshi and within six
months it had secured top position in the market. Sales volume reached
approximately 28 million cases for the year, and in its first year
Nodogoshi Nama became one of Kirin's biggest-ever hit products
after Kirin Ichiban Shibori and Tanrei Nama. In 2006,
we will respond to customer expectations and fine tune the brand,
realizing a more distinctive flavor with a finer head, while aiming
for further growth in a brand that is symbolic of Kirin's dynamism.
4. RTD category, focused on Chu-hi
In the growing chu-hi market, Kirin Chu-Hi Hyoketsu
has sustained market leadership since its launch. In 2005 we offered
Hayazumi Lemon in the new range 'low-sugar' series. In March
2006, we will further broaden the original and innovative Hyoketsu
lineup with the launch of Yuzu (a Japanese citrus flavor).
We also plan to launch a sugar-free chu-hi range with a different
concept to Hyoketsu to meet a diversity of customer preferences.
5. Shochu, Wine and Spirits, and Other Alcohol Beverage
categories
In the shochu category, which continues to grow, Kirin
is presenting a new lineup, based on the highly successful Kirin
Mugi Shochu Pure Blue. In wines, as well as selling three new
varieties to the Franzia brand for everyday drinking, we will
promote the strengthening of core brands such as  .
In spirits, as well as Chivas Regal and Four Roses,
we are striving for further growth, concentrating on Kirin brand whisky
Fuji-Sanroku, which has received an excellent reception since
its launch in September 2005. Moreover, we are further broadening
the product lineup of the Kirin subsidiary company Eishogen, which
sells such Chinese liquors as Shinluchu, and promoting a stronger
comprehensive alcohol beverages business.
6. Marketing Initiatives
With the Torino 2006 Olympic Winter Games and the 2006 FIFA World
CupTM Germany, 2006 can be said to be a global year of
sport. Kirin aims to create a range of highly original proposals throughout
the year around the overall theme of supporting Japan and will be
involved in a range of activities supporting sports. These include
the 'Kirin support for Japan at the Torino 2006 Olympic Winter Games
campaign', and a campaign to support the Japan's national soccer team.
Further we plan to join with customers from local regions, and introduce
regional specialty foods from all over the country alongside beer
as part of our 'Choosing the best tastes in Japan campaign' which
we will continue from 2005.
(2) Sales strategies
Through strengthening the links between the sales organization,
local factories and Kirin Communication Stage* we are leveraging community-based
sales to bring us even closer to customers in regional areas. Kirin
will begin to build a fan base through the full dissemination of local
information via the internet and by cooperative activities with local
companies and organizations. By strengthening our community-based
development and proposal-oriented sales structure we aim to become
a corporation that is well regarded by local communities. Furthermore,
by observing our voluntary guidelines, we will strive for further
diffusion of the open-pricing system introduced in 2005 to promote
a trading environment based on a cost plus mind-set.
* A Kirin
Group company involved in merchandising at volume outlets and restaurants/bars.
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