Japan's Kirin ends Myanmar beer tie-up with army-owned partner after coup

[ritcha]

Japanese drinks giant Kirin Holdings on Friday scrapped its beer alliance with a conglomerate linked to the Myanmar military after the army staged a coup deposing the democratically elected government earlier this week.

The move effectively scraps the joint venture called Myanmar Brewery, in which Kirin's controlling stake is valued at up to $1.7 billion, and follows an inconclusive, seven-month probe mandated by Kirin into its Myanmar partner.

The abrupt end to the alliance is a caution for other Japanese companies, from Aeon Co to auto-parts maker Denso Corp, whose Myanmar ventures have also been thrown into question after the army takeover, analysts said.

Kirin's 2015 investment in Myanmar was part of a flood of Japanese investment into the Southeast Asian nation, encouraged by the Japanese government, as sanctions were lifted and Aung San Suu Kyi's party won the first free election after nearly half a century of junta rule.

But Kirin's 2015 deal stood out because it tied the Tokyo-based beer maker directly to Myanmar Economic Holdings Public Company (MEHL), which at the time was still sanctioned by the United States for its army ties.

Myanmar’s military on Monday overthrew the government of Suu Kyi, handing power to its top general and declaring a one-year state of emergency, sparking international condemnation and calls for fresh sanctions by Washington.

"We have no option but to terminate our current joint-venture partnership," Kirin said in a statement on Friday.

Consumers and restaurants in Myanmar have started boycotting army-linked products, including Myanmar Brewery's main brand Myanmar Beer. Myanmar Brewery controls nearly 80% of the country's beer market, according to figures published by Kirin in 2018.

MEHL and Myanmar Brewery, did not respond to calls seeking comment.

HIGH RISK

Kirin acquired a majority stake in Myanmar Brewery for $560million, after losing a bidding war over Singapore's beer-to-property conglomerate Fraser & Neave to Thai Beverage in 2013 as part of a push into Southeast Asia.The Myanmar business accounted for less than 5% of Kirin's global beer sales, but stood out as one of its few growth markets.

MEHL was founded in 1990, modelled on Singapore's investment company Temasek Holdings to promote businesses from telecoms and transportation to energy and resources.

But its opaque ownership structure and ties to the military drew criticism and scrutiny from activists and the United Nations.


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