Heineken Announces Plans To Purchase Brasil Kirin Holding

The new deal is expected to increase Heineken's scale across Brazil and strengthen its brand portfolio.

Brasil Kirin operates 12 production facilities with its own distribution network and has a strong presence in the North and the North East of Brazil, where Heineken now has less exposure.

The deal will make Heineken the second largest brewer in Brazil behind AB InBev which completed its acquisition of SABMiller a year ago making it the biggest brewer in the world.

For the Japanese brewer, this marks a departure from the Brazilian market, having paid nearly $3.9 billion in 2011 for 12 breweries, a business which has subsequently lost market share and seen raw materials costs rise due to a weak currency and rampant cost inflation.

This way, the Dutch company immediately gets 9 % (for beer) and 2 % (for soda) market shares in Brazil and it gains plenty of additional traction in 2 of its weaker regions in the country: the north and northeast. "Responsible for over 60% of beer sales in Brazil, A-B InBev's market dominance remains uncontested". According to Heineken, the Brazilian beer market is the third largest in the world, with 139 million hectolitres of beer produced in 2015. The reason for this sale is because of a "stagnant and competitive market", the brewer stated.

The Dutch beer-maker says that the Brazilian beer market is highly attractive with its growing population and positive GDP outlook.

Heineken expects that the transaction provide significant cost synergies, through production efficiencies including logistics, brewery optimisation and optimisation of selling, general and administrative expenditures.

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