Unfortunately beer drinkers have not been turning Japanese, at least not at the rate they were last year.  Recently, Kirin Holdings Co. reported lower-than-expected semi-annual earnings.  Compared to the same time period in 2006 Kirin Holdings, which owns Australian Lion Nathan and Philippines San Miguel Group, reported that sales in 2007 are down 12%.  Sighting an unforseen rise in the cost of raw materials and slower turns of their numerous brands over the last six months.

Kirin President Kazuyasu Kato explained, “We had a much higher-than-expected impact on our earnings from higher raw material expenses.”  The Japanese beer giant hoped efforts of its Marketing Departments through cross-promotion and increased point of sale merchandise would carry them through the increased raw material spend.  However, this strategy ultimately fell short of its target.

Kato mentioned that he did not foresee the cost of raw materials to drop down to their 2006 price range.  He has not ruled out the option to raise the cost of their products, but hopes further marketing plans will bring Kirin’s sales back toward their 2007 forecast.  To make matters worse, rival Japanese brewer Asahi took over the top spot as Japan’s number one beer.

Although not mentioned in the release, another reason why many large brewers and well-known brands have been struggling in 2007 is due to the growth of the craft beer industry.  More and more beer enthusiasts are buying outside of the traditional brands.  Although import brands have seen steady growth over the last few years, tried and true brands like Kirin and others are beginning to suffer as consumers are venturing out to newer, smaller and local beer brands.