Japanese brewer Kirin takes Australian craft beer into Asian markets

When Tokyo-based Kirin purchased brewer Lion Nathan in 2009, few people anticipated the craft beer revolution about to sweep Australia. Eight years later – and having invested more than A$8 billion – Kirin is powering that revolution, helping niche beer brands to grow and supporting a new wave of Australian exports.

Long-term investment in big brands and boutique beers

In early 2017, Kirin began promoting the Fremantle-based Little Creatures brand in China. With a micro-brewery in Hong Kong and a pop-up bar in Shanghai, Kirin partnered with local distributor DXCEL to sell Little Creatures into the world’s largest beer market. Today, Little Creatures beers are sold in 15 countries outside of Australia and New Zealand, including five in Asia.

Success with Little Creatures rides on the back of decades of investment in Australia’s vibrant drinks industry. Lion – previously Lion Nathan – now offers more than 20 Australian beers, ranging from the Tooheys and XXXX brands to premium beers like James Boag, and craft beers like the Byron Bay Brewing Company.

Its brand line-up also includes an extensive range of well-known dairy brands and quality manufactured food products such as Tasmania’s King Island Dairy.

In 2017, Kirin’s subsidiary, Lion, employed 6,712 people at 34 manufacturing facilities across Australia and New Zealand. Its annual sales reached approximately A$5 billion in 2016, and the company makes a direct contribution of approximately A$2 billion to the Australian economy.

Craft beers boost local tourism

Lion has joined the trend for brewers and distillers to turn their commercial premises into tourist attractions. These venues help diversify employment opportunities in inner-city suburbs, and inject life and vigour into local hospitality industries.

For example, in October 2015 Lion invested A$70 million in the redevelopment of one of South Australia’s most iconic landmarks, the West End Brewery in Adelaide. The restored complex now offers tours around the brewing facilities, which date back to 1859.

The landmark XXXX Brewery and Ale House in Brisbane tracks the rise of one of Australia’s most popular beers from its origins at the Castlemaine-Perkins brewery in 1878. Guided tours have helped turn the Milton Street brewery into a regular stop on the Brisbane tourist trail, and celebrate Lion’s diversification into craft beers.

Role model for corporate citizenship

As a major Australian food producer, Lion has spotted opportunities for innovative corporate social responsibility programs. Via the hunger relief organisation, Foodbank, Lion has repackaged 1.5 million kilos of surplus food into food deliveries, and created 2.5 million meals for Australians in need.

Lion has also commissioned a series of health and nutrition studies across its product line. The Goodness Project commits the company to remove 4 tonnes of sodium, 1,400 tonnes of sugar and 500 tonnes of fat from the national food supply chain by 2019.

To encourage responsible drinking, Lion has become a major contributor to Australia’s Drinkwise campaign, donating a total of A$1.5 million. When added to employee donation-matching programs, Landcare grants and environment improvement programs, Lion contributed over A$2.6 million in community investments during 2015.

20 years of growing investment

As with many inward investment stories, Kirin’s participation in Australia’s food and beverage industry is a testament to planning, strategic vision and incremental expansion. Launched in June 2017, Lion Unleashed – Lion’s innovative program to partner with top entrepreneurs and startups in the Australian food and beverage industry – will provide equity of up to A$50,000 from Lion’s accelerator specialist Slingshot. Winners will have access to benefits worth A$500,000 that include technology, office space and networking advice.

Kirin’s involvement started in 1998, when the company purchased 45 per cent of the beverages group, Lion Nathan, which was then dual-listed in Sydney and Auckland. The purchase marked Kirin’s first major overseas acquisition. Its objective: to partner with companies that valued and understood beer-making, and thereby help Kirin to expand around the world.

This purchase allowed Kirin to begin investing in some of the most popular brands in Australia and New Zealand. Besides Tooheys and XXXX, these included Hahn in Sydney, New South Wales and Speight’s in South Island, New Zealand. The purchase also enabled investment in premium brands, such as Tasmania’s James Boag. Today, Kirin owns eight major breweries in Australia.

Confident of its prospects in Australia, Kirin’s next move took the company into perishable foodstuffs. In 2007, the company acquired the dairy and drinks business, National Foods, and in 2008, National Foods purchased the Dairy Farmer Milk Co-operative. Just one year later, Kirin purchased all remaining shares to take full ownership of the merged Lion Nathan group.

With all brands operating under one name, Lion represents one of the largest non-resources investments made by a Japanese company into Australia. The current investment tally exceeds A$8 billion.

Strategic partnership with Australian farmers

One of the innovations behind Kirin’s brand growth is a strategy that focuses on a three- to five-year term. This longer-term planning strategy aims to focus executives on the medium- to longer-term outlook, rather than short-term, quick-fix wins.

Lengthier planning cycles are complemented by policies that promote employment stability for management-level staff. Japanese corporate management practices typically see managers retain positions for longer periods of time, as compared to their Australian counterparts. Long-term strategies have helped Lion executives create deep partnerships with local suppliers.

For example, as Australia’s leading branded dairy business, Lion purchases approximately 1 billion litres of milk each year from 550 Australian farms. To help dairy farmers integrate with its own supply chain, Lion has launched a number of funding schemes.

These include a A$100,000 Vat and Generator Scheme, which provides a 20 per cent rebate on milk cooling and vat replacements. The scheme helps dairy farmers replace old vats with more energy-efficient systems that reduce farms’ running costs. In addition, a Landcare Grants Program helps dairy farmers simultaneously improve farm productivity and adopt improved environmental practices.