October 31, 2007
Kirin to raise prices of beer, happo-shu, new genre and beer-taste soft drinks
Tokyo, October 31, 2007—Kirin Brewery Company, Limited ("Kirin") today announced it would raise the prices of its beer, happo-shu, new genre and beer-taste soft drink products from February 1, 2008, representing the first price rise in 17 years.1 Although Kirin has managed to accommodate changes in the basic manufacturing costs of these products without raising prices since March 1990, Kirin has decided that present circumstances have made price revisions unavoidable.
In the period since prices were last revised, Kirin has implemented an array of cost reduction and operational streamlining measures, such as improving its manufacturing capacity through initiatives including restructuring plants, and utility cost reduction, and development of new packaging. However, the cost of raw materials has been increasing significantly, due to a range of causes that include tight supply and demand for cereal for human consumption arising from escalating demand for bioethanol and growing demand in BRICs and other newly emerging countries, and escalating fuel costs.
As a result, Kirin's raw material costs for fiscal 2008 are expected to surpass those of fiscal 2006 by at least 15%, with prices for imported malt, the primary ingredient of beer, more than doubling, and those for aluminum, the material used in cans, increasing by almost 30% in the most recent market period. Raw material costs are envisaged as remaining high in the longer term, and have reached a level that cannot be covered through Kirin's ongoing cost-cutting initiatives.
Based on close analysis of the situation and outlook, Kirin has decided that price rises are unavoidable, and will therefore increase its manufacturer's prices for beer, happo-shu, new genre products and beer-taste soft drinks. The Company will continue to improve the efficiency of its operations while providing safe, high-quality products, and will make every effort to retain the widespread support of its customers.
Overview of price increase
1.Effective from: February 1, 2008
2.Products affected: all beer, happo-shu, new genre and beer-taste soft drink products
Note:Under the open pricing system, manufacturers do not announce recommended PTR (price to retailer) and PTC (price to consumer) amounts. The impact of manufacturer's price rises on retail prices will therefore vary.
1 Kirin entered the happo-shu market in 1998 and the new genre market in 2005. Excludes any price increases resulting from changes in Japanese liquor or consumption taxes.