Japanese brewer Asahi to buy Etika's Southeast Asian dairy operations

Asahi Group Holdings Ltd, Japan's biggest beer maker by sales, today said that it will buy the Southeast Asian dairy operations of Singapore's Etika International Holdings Ltd for 33.6 billion yen ($329 million).

Tokyo-based Asahi, known for its popular "Super Dry" beer, will buy Kuala Lumpur-based Etika Dairies Sdn Bhd and 11 other companies from Etika Holdings.

Singapore Stock Exchange-listed Etika Holdings said that it will use proceeds of the sale to pay bank borrowings, expand its business and distribute part of the proceeds to shareholders.

Etika Dairies manufactures and distributes milk products, mainly comprising sweetened condensed milk, evaporated milk and complementary products such as the repacking and distribution of full cream and instant high calcium non-fat milk powder, instant coffee powder and tea dust.

Its products are sold in Malaysia and in more than 50 countries in the ASEAN, North and Central Asia, Middle East, Asia Pacific region, Central American, Caribbean, and African region.

It also has joint venture in New Zealand for manufacturing UHT milk products using Aseptic Polyethylene Tephthalate (PET) bottles.

With an ageing population and domestic demand stagnant, Asahi has recently been looking at expanding overseas through strategic acquisitions.

Its long-term vision aims to increase its sales to Yen 2–2.5 trillion, increase its share of overseas sales to 20-30 per cent and join the ranks of the top global food companies by 2015.

In order to achieve this goal, it plans to drive growth in its existing businesses as well as expand its overseas investments.

Its recent acquisitions include Australia's Schweppes and Flavoured Beverages Group Holdings, and the water and juice businesses of P&N Beverages Australia Pty Ltd, New Zealand's Independent Liquor, and Charlie's Group Ltd, a fruit juice producer, a stake in China's Tsingtao Brewery and Malaysia-based PepsiCo bottler Permanis Sdn.

Having made liquor and soft-drink acquisitions in Australia and New Zealand, Asahi is betting on Southeast Asia for growth, where middle-income consumers have grown rapidly in numbers.

Asahi president, Naoki Izumiya, had last year said that he aims to bring the company sales in Southeast Asian nations to 100 billion yen ($1 billion).