Bottoms Up

22 May 2012

Japanese brewer to make

Macau Beer international brand

By Staff Reporter

This year, for the first time, people in Japan will be able to buy Macau Beer, the Special Administrative Region’s only local brand. The manufacturer is planning to export it to other markets too, including Singapore, South Korea, Taiwan and Hong Kong.

“Macao’s reputation is improving more and more, and it’s spreading,” said Tatsuya Kaburagi, executive vice-president of Kirin Brewery (Zhuhai). “We want our brand to grow with it and become an international brand.”

Kirin is one of Japan’s two biggest beer-makers, running operations across the globe. It manufactures Macau Beer in a large factory in the Jinding district of Zhuhai, which borders Macao. Annual production is 15,000 24-bottle cases a year, of which currently 99 percent is sold in Macao and one percent in Zhuhai.

It is a premium brand, selling for 20–30 patacas, and competes against European and American beers like Carlsberg, Budweiser and Heineken. It is sold in Portuguese and other Western restaurants, as well as in hotels and casinos.

“It is for those who want to experience the culture of Macao,” said Kaburagi. “We have kept its classical European taste. We don’t produce it in large quantities as we want to keep it as a special brand. We will gradually increase output and expand the market.

“This year we will begin exporting the beer to Japan. Starting off with 1000 cases, we will sell it in department stores, as a gift set, as well as in restaurants. At first, we will target Japanese consumers who have been to Macao, and then we will build up the core users. We are also in discussions with distributors in other Asian markets – Singapore, South Korea, Taiwan and Hong Kong – and plan to start off the process this year or next.”

And what of the mainland market, we ask? “Chinese people do not like European or American beers as they find them too thick. They like a lighter taste. The market here is in its infancy. After it becomes more mature, people will find that they like the taste of the beer. It will take time,” he said.

American founder

The brand was founded in 1996 by an American who discovered that the city had no beer of its own; he wanted to create a taste suitable for Westerners.

He set up a brewery in Macao, with limited production. The packaging of its cans and bottles depicted images of the old city, including sailing ships and the Guia Lighthouse.

In the same year, Kirin set up a wholly owned foreign invested company in Zhuhai, with registered capital of US$74 million, and took over a local brewery. It was attracted by the rapid economic growth of Guangdong and the rising demand for beer among its population.

Founded in 1885, Kirin is the oldest brewer in Japan and ranks, along with the Asahi Group, as one of the top two in terms of production.

In 2011, Kirin sold 160.3 million cases of beer, down 5.7 percent from 2010. Its target for this year is 163.5 million. Japan’s demand has become stagnant due to its shrinking population, changing consumer tastes and weak economic growth. The situation was made worse last year by the earthquake and tsunami on 11 March, which caused a temporary suspension of production and a sombre mood nationwide that was not conducive to drinking beer.

This long-term decline is forcing Japan’s beer-makers to expand abroad. China is the world’s largest market, ahead of the US and Brazil. After its investment in Zhuhai, Kirin set up a company in Shanghai in 2004 and acquired a stake in the Qiandaohu Brewery in Hangzhou in 2006.

In August 2011, Kirin paid US$2.6 billion for a controlling stake in Schincariol, one of Brazil’s largest beer and soft-drinks producers.

Kirin owns major stakes in Lion Nathan of Australia, Fraser and Neave of Singapore and San Miguel of the Philippines. It also makes coffee, tea drinks, mineral water, fruit drinks and wine, and has operations in health and dairy foods and pharmaceuticals.

The emblem of the company is the Qilin, a mythical hooved creature that first appeared in books in China in the fifth century BC. It is believed to be a good omen that brings prosperity, and is similar in appearance to a giraffe.

In 1406, during the Ming dynasty, Admiral Zheng He brought two African giraffes to the Emperor in Nanjing after his journey to the east of the continent. The emperor was delighted to see these strange animals and called them Qilin; he proclaimed them to be magical creatures, whose capture was a sign of his greatness.

Their fame spread across East Asia. In Korea, the creature is called the ‘girin’ and in Japan the ‘kirin’.

In 2002, Kirin acquired Macau Beer. Kaburagi declined to give the purchase price. “We saw its potential,” he said. “The GDP of Macao was growing very fast; it was 9.5 percent that year. It had a very small market share and its production scale was very limited. Beer is a local product. The name is very important. We want to make it an international brand.”

The firm saw the granting of new gambling franchises and the fast increase in the number of visitors from the mainland and overseas; it saw an opportunity to develop a brand to sell to this booming market.

In 2006, Kirin spent 500 million yuan to build a state-of-the-art brewery in an industrial zone in Jinding in Zhuhai. It covers an area of 200,000 square metres, has an annual production capacity of 200,000 tonnes, and employs 800 workers. It was, in effect, the firm’s custom-built brewery in China. It is close to the expressway that links Zhuhai to Zhongshan, Jiangmen, Foshan and Guangzhou; the road goes all the way to Beijing.

Production in other parts of China has been through joint ventures or acquisitions of existing factories. The company chose Zhuhai as the site for their own factory because of the good relationship it had built up with the city government, who offered favourable terms and a good site.

This brewery produces three brands –Haizhu, Kirin Ichiban and Macau Beer – as well as non-alcoholic drinks.

Haizhu, which sells for four–eight yuan a bottle, is one of the most popular beers in Guangdong province. Kirin Ichiban sells for 10–15 yuan; it is also mostly sold in Guangdong, though achieves some sales outside.

Last year the plant produced 80,000 tonnes, of which Haizhu accounted for 60 percent and Kirin Ichiban for 10 percent. Macau Beer accounts for a fraction of output; it is rising by 10 percent a year.

Upgrade, repackage

The new factory enabled the firm to use the latest technology for the three brands. It closed the small brewery in Macao and turned the space into an office.

“After the acquisition, we created new packaging for Macau Beer and upgraded the production process,” said Kaburagi. They redesigned the bottles in green, the colour of the SAR, and featured Macao’s landmarks on the labels, such as the ruins of St Paul’s and the Guia lighthouse. In response to demand from customers, they developed an improved product with 100 percent high-quality malt.

“For the Blonde Ale, the golden label was embellished with an elegant outline of the ruins of St Paul’s, complimented by a lively floral pattern,” said a company statement. “All this was to celebrate the resplendent and magnificent face of the new and vibrant Macao. It is a full-bodied beverage with a malty aroma and silky smooth finish. It has a rich European texture and quality.”

The ingredients include water from a nearby reservoir in Jinding; hops from China and imported hops, including some from the Czech Republic; barley, some from China and some imported; and yeast from Macao.

“Our strategy for Macau Beer is not large-scale production but to increase it gradually and retain it as a special brand,” said Kaburagi. “We will gradually develop the market.”

In the coming years, the brand will carry the name of the city to countries across A