Sapporo plans expansion in North America and Vietnam

Sapporo Holdings Ltd. President Takao Murakami expects Japan’s fourth-largest brewer to beat its full- year net income forecast after cutting marketing costs.

Net income for 2009 is likely to be more than the company’s forecast of 3 billion yen ($33 million) while sales may fall short of the October forecast of 400 billion yen, Murakami said in an interview in Tokyo today.

Sapporo trimmed promotional costs last year after 2008 sales fell and profit growth slowed. The Tokyo-based brewer plans expansion in North America and Vietnam as Japan’s population ages and younger consumers switch to other beverages. Japan’s demand for beer and similar drinks will probably shrink 2 percent this year, Murakami said.

“The only way for Sapporo to grow is to go outside Japan,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments Ltd. in Tokyo, who declined to comment on his shareholdings. “It needs to save money at home, as beer consumption won’t probably recover.”

Sapporo rose 2.7 percent to 527 yen at the close of trading in Tokyo. The stock fell 8.9 percent last year, compared with a 19 percent gain in the Nikkei 225 Stock Average.

Sales of Sapporo’s beer and similar beverages in Japan may increase 5 percent by volume this year as the company increases marketing for the 120-year anniversary of its Yebisu brand, Murakami said.

North American Expansion

Sapporo wants to expand brewing capacity in North America, where it owns Sleeman Breweries, whose sales may rise 14 percent this year after a 10 percent increase in 2009, he said. The Japanese brewer will consider acquisitions, increasing outsourcing or investing “several billions of yen” in existing plants, Murakami said.

In Vietnam, Sapporo agreed to buy a 65 percent stake, valued at $25.4 million, in Kronenbourg Vietnam Ltd., a joint venture between Carlsberg A/S and Vietnam National Tobacco Corp., the company said on Dec. 10. The Vietnamese partner will retain a 35 percent stake.

Sapporo plans to open a new brewery in Vietnam 2012. It may also ship Black Label beer and other products from Vietnam to other Southeast Asian countries and Australia.

The company aims to have as much as 5 percent of the Vietnamese beer market with sales of $128 million or 12 million cases by 2019, it said on Dec. 22. A case of beer in Japan is equivalent to 12.66 liters (3.34 gallons).

In Singapore, Sapporo will start to sell beer this year, using Pokka Corp’s distribution network. Sapporo bought a 21.65 percent in Japanese beverage maker Pokka in 2009.