Exclusive-Japan's Kirin in talks to triple investment in Indian craft beer maker Bira-sources
By Aditya Kalra, M. Sriram and Rocky Swift
NEW DELHI/TOKYO (Reuters) - Japanese beverages firm Kirin Holdings is in talks to invest $70 million in Indian craft beer maker Bira, four sources told Reuters, doubling down on the fast-expanding South Asian market at a time when it is facing pressure on growth at home.
Kirin, which first invested $30 million in Bira for an under 10% stake last year, is set to pump in the additional funds at an equity valuation of $450 million, the sources said. Negotiations between the Japanese company and Bira's owners are in the final stage, one of the sources said.
The latest deal talks come as Japan's major drinks makers are facing a steady decline in revenue from alcohol sales as the domestic population shrinks and younger people drink less than in previous decades, forcing the companies to expand overseas or foray into new markets.
Kirin's plan for additional investment in Bira comes even as the Japanese yen has fallen to 24-year lows, which is set to raise the cost of overseas acquisitions for local companies.
Started in 2015, Bira is one of India's most popular craft beer makers. It competes with international brands such as Carlsberg as well as Heineken-owned United Breweries in India's estimated $5 billion beer market.
According to two of the sources, Kirin would have a total stake of roughly 15% in Bira once the latest funding round closes.
Japan-based financial company Mitsubishi UFJ Financial Group is also in talks for participating in the round with a $15 million investment, the sources added.
Bira CEO Ankur Jain declined to comment for this article. Kirin and MUFG also declined to comment. The sources declined to be named as the deal discussions are private.
North America has been a focus area for Japanese drinks makers. Kirin owns a stake in New York's Brooklyn Brewery, and its subsidiary owns U.S.-based craft beer makers New Belgium Brewing and Bell's Brewery. Rivals Asahi and Suntory are looking to expand into the North American drinks market.
The new planned Bira investment "is a small amount, but Kirin is bullish on India," said the first source, adding that Keisuke Nishimura, a senior Kirin executive, visited India recently to assess the retail market and Bira's breweries, and Bira's CEO Jain in recent weeks visited Japan to meet the Kirin management.
The talks for the new funding come at a critical time for Bira, especially after its sales plummeted during the COVID-19 pandemic.
Even though Bira's net sales revenue in the quarter to June 2022 was 132% higher at $20 million, it reported an operating loss of $4 million in the period, according to an internal investor presentation seen by Reuters.
The quarter was the "highest ever" in terms of beer volume and revenue for Bira was "more than 2X over Pre-COVID", the presentation noted.
Craft beer sales are on the rise in India as younger, affluent consumers in big cities choose brands and pubs that make lighter brews and promise fresher ingredients.
With five breweries in India, Bira says its beer is available in 500 towns and cities in 15 countries.
The first source added Bira would use the funds raised in the latest round to open new breweries and launch new products such as ciders.
Two of the other sources told Reuters Bira was also considering a stock market listing but that was at least two years away.
(Reporting by Aditya Kalra in New Delhi, M Sriram in Mumbai and Rocky Swift in Tokyo; Editing by Muralikumar Anantharaman)