Asahi switches to non-alcoholic beer after $ 20 billion M&A craze

Asahi wants to break into a market that has proven surprisingly resilient during the coronavirus pandemic: soft drinks.

Asahi’s decision followed a $ 20 billion worth of madness on beer brands like Peroni, Pilsner Urquell at Carlton Draft in recent years. But consumers’ attention to all things “wellness” has been boosted by Covid-19. Stockings sales and soft drink increased during the pandemic even as pub closures led to a worldwide decline in beer sales.

“Non-alcoholic is a good all-rounder,” said Atsushi Katsuki, Asahi’s general manager since March, in an interview. “It helps solve social issues, it connects us with new users and it drives our profitability.”

Sales of weak and non-alcoholic beers benefited from people spending more on drinks to consume at home during lockdowns, which matches Asahi’s broader strategy of focusing on higher margins. “Premium” drinks.

This change was also supported by pressure in Japan, where beer volumes have fallen for more than two decades and the government has tightened its crackdown on heavy drinking.

In Europe, sales of Asahi’s non-alcoholic beer grew 10% in 2020 from the previous year, driven by the popularity of brands such as Birell and Peroni Libera – even those of the beer fell 6 percent based on volume. Asahi said he wants to quadruple its sales ratio of soft drinks in Europe by 2030, up from 5.1% last year.

The company, known in Japan for its flagship Super Dry brand, launched a low-alcohol product called Beery in March, using European beverage technology it acquired to recreate a low-alcohol beer drink. alcohol. It aims to triple its ratio of drinks containing 3.5% alcohol or less to 20% of its product assortment by 2025.

“It’s not just about changes in consumption among young people,” Katsuki said. “Until now, we haven’t been able to come up with options tailored to different circumstances to reach out to people who can drink but don’t want or people who want to drink but can’t.”

The sales volume of low-alcohol and non-alcoholic beverages is expected to increase by 10.7% per year in the United States, by 6.6% in the United Kingdom and by 6.5% in Japan between 2020 and 2024, according to the beverage analysis group. IWSR.

Rivals such as Anheuser-Busch InBev and Heineken have also built alcohol-free wallets. But analysts have taken a wait-and-see stance on the contribution of these products to earnings, with the low-alcohol, non-alcoholic market accounting for less than 2% of that for intoxicating drinks. Asahi’s operating profit fell by a third last year as it relied heavily on restaurant and pub sales.

Katsuki, 61, took over the world’s seventh largest brewer in a considerably tougher business environment than the previous five years, when Asahi spent billions to reclaim AB InBev’s European and Australian assets, including Grolsch and Carlton & United Breweries.

The company has ruled out any large acquisitions until 2024, when it hopes to have reduced its net debt to three times earnings before interest, taxes, depreciation and amortization, from its current level of six times.

“We are discussing internally whether our current portfolio and our footprint are sufficient. There’s also the question of whether it’s okay to just drink beer, ”Katsuki said.

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