Asahi aims to boost global presence with Australian and NZ buys

By Helen Glaberson

- Last updated on GMT

Related tags: Soft drinks, Soft drink, Coca-cola

Asahi is to proceed with two Australian and New Zealand soft drinks deals, with the aim of becoming one of the world’s top food and beverage companies.

The firm announced plans to buy the water and juice business from P&N Beverages​, Australia’s third largest soft drink company by volume, and at the same time ​revealing a separate plan to buy New Zealand juice maker Charlie’s Group.

Asahi said the two deals would help the company reach its goal of increasing sales to JPY 2–2.5 trillion, (approximately €20.3bn), boosting its overseas sales by 20-30 per cent.

The firm plans to merge P&N with Schweppes, the second-largest drinks maker in the market behind Coca-Cola.

Asahi bought Schweppes in 2009, along with the local rights for Pepsi and 7UP.

Asahi aims to enhance its position within the Australian beverage market by enabling Schweppes to strengthen its product portfolio and gain efficiencies in supply chain management,"​ said the firm.

Competition for Coke

Coca-Cola should be concerned about increased competition in Australia, with the deal making Schweppes a more formidable competitor, Sydney-based drinks analyst John Band told BeverageDaily.com.

However, neither deal will have an impact globally, said the analyst, because the firm doesn’t own any international brands.

Asahi's soft drinks operations are only material in Japan and Australasia, he said.

“Its volumes outside Japan come largely from Pepsi and Schweppes brands that it can't sell outside Australasia. Neither of these deals do much to change that.”

“Asahi's just ensuring that its Australian business has the same strength that any [second position] drinks player in any market should have, by picking up some local brands in appropriate categories.”

Revised strategy

Asahi had to revise its initial plans to buy the whole of P&N after the firm was met from opposition by Australia’s consumer regulator, the Australian Competition & Consumer Commission (ACCC) who was concerned about competition in the industry.

The firm has now announced plans to acquire P&N’s water and juice business only.

Asahi will buy all the issued shares of P&N but will sell off its carbonated soft drink and cordial business to Tru Blu Beverages Pty Ltd, which is owned by P&N’s owner.

The revised strategy will result in a transaction of approximately JPY 16.3bn (€139m).

Juice and water market

Although Asahi currently has a big share in the carbonated drinks market, it doesn’t have as big a share in the juice or the water market, which are important growth areas within soft drinks, said Band.

“So while it'll be a disappointment for Asahi that regulators didn't let them buy the whole company, they've got the important bit in terms of filling a gap in their Australian portfolio,” ​he said.

Meanwhile, P&N's previous owners will keep the carbonates and concentrates business, providing mild competition for Coke and Asahi at the low end of the market, he added.

Band said the Charlie's deal is more interesting as the firm is trying to pick up a significant brand at the top end of the market which they will then push heavily across NZ and Australia.

“Charlie's is a different play, it's a high-end producer with a focus on 'natural', 'organic' and 'ethical', rather like Innocent in the UK,” ​he said.

In addition, Band said it's not a solely domestic company, with a factory in Australia.

Related topics: Business, Oceania, Beverages

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