Asahi Breweries, Ltd.

7–1, Kyobashi, 3-chome
Chuo-ku, Tokyo
Japan

Public Company
Incorporated: September 1, 1949
Employees: 2,672
Sales: ¥236 billion (US$1.482 billion)
Market Value: ¥245.7 billion (US$1.543 billion)
Stock Index: Tokyo Osaka Nagoya

The history of the Asahi Breweries is linked with that of virtually every other brewery in Japan. The first brewery built by the Japanese was a government enterprise; it was established in the early days of the Meiji restoration on Hokkaido, the northernmost of the islands of Japan. In the 1880’s the government sold its Hokkaido brewery to private interests—and thus the Osaka Beer Brewing Company, Japan Beer Brewery Company, Sapporo Brewery, and Nippon Brewing Company all came into being. In 1888 a man named Hiizu Ikuta was sent to Germany by Osaka Beer Brewing Company to study brewing at the famous School of Weihenstephen in Bavaria. He returned the following year and was appointed manager and technical chief of the Suita Brewery, one of the individual breweries controlled by Osaka. One year later, in 1890, his creation, Asahi beer, was released for sale.

Soon after the turn of the century the Osaka Beer Brewing Company, Sapporo Brewery, and Nippon Brewing Company were amalgamated into the Dai Nippon Brewery Company. Asahi, now a separate division of the new company, began a long history of producing nonalcoholic beverages as well as beer. Asahi pioneered the soft drink industry in Japan with both Mitsuya Cider and Wilkinson Tansan, a mineral water. Mitsuya Cider was released for sale in 1907, 17 years after Asahi beer had first been introduced to the market.

In 1949 Dai Nippon Brewery was divided into two parts—Asahi Breweries and Nippon Breweries. Since that time, the growth of Asahi has been impressive. In 1951, Asahi mineral water was introduced to the Japanese market. That year also saw the introduction of Japan’s first fruit-flavored soft drink, Bireley’s Orange. Asahi’s first plant exclusively devoted to the production of soft drinks was opened in Kashiwa in 1966. Six years later another Asahi soft drink plant began production in Fukushima. Soft drink sales now account for 27% of the company’s total sales (a lower percentage than during the mid-1970’s when soft drinks accounted for 35% of sales). Asahi now plans vigorously to expand its sale of soft drinks in the Japanese market. In 1971, in a joint venture with Nikka Whiskey Distilling Company, Asahi established Japan International Liquor to important foreign liquors, primarily Scotch whiskeys (Dewars and King George IV).

1978 was a banner year for Asahi: the company’s net profit passed the billion yen mark for the first time. From 1973 to 1985 the company’s sales increased by almost 100%.

In February of 1986 Asahi made a move that was virtually unprecedented in the brewing industry—it changed the yeast that it had traditionally used to brew beer. This bold move was prompted by the slow but still steady decline that the company had been experiencing in its share of the Japanese beer market. The move was not made without extensive marketing research: in 1985 Asahi conducted an extensive series of studies that indicated that Japanese drinkers actually preferred beer quite different in taste from that traditionally brewed by Asahi (Asahi’s beer had a strong taste of hops). The company decided to change the yeast fungus it had been using in order to achieve a taste that it believed would be more palatable to the Japanese beer drinker.

This change was the first for Asahi of such magnitude in almost 30 years: the existing yeast had been used since 1957. The change in Asahi’s yeast was accompanied by a change in its label. Such changes would not have been contemplated by the company if it were Japan’s leading brewery; so dramatic a switch in taste and presentation would have been considered too risky. Asahi’s initiative was rewarded: within a very short period the company has managed to recover a good portion of its lost market share.

Asahi has also enjoyed other kinds of success. Its Central Research Laboratory, charged primarily with quality control, has also developed new products, including “Ebios,” a day brewer’s yeast renowned in Japan for its medicinal properties; the company introduced Ebios in the 1930’s and has been manufacturing it ever since. Laboratory staff also invented the world’s first outdoor fermentation and lagering tank (the “Asahi Tank”); the West German beer plant construction firm of Ziemann soon negotiated with the company for a license to build the tank.

Asahi’s soft drink division received new impetus in the mid-1980’s when the company concluded an agreement with Schweppes: several Schweppes brands are now manufactured in Japan by Asahi—Tonic Water, Golden French (an apple and ginger drink), Passion Orange, and Grapefruit Dry. Asahi has entered into other partnerships, notably to import foreign beers and wines into Japan. In 1983 the company concluded an agreement with the Löwenbräu Company of West Germany to produce Löwenbräu beer under license in Japan. The following year Asahi formed a partnership with the Australian wine company Lindemann’s: Asahi now sells eight kinds of Australian wine under the “My Cellar” brand. Asahi also imports the German Drathen Company’s “Tafelwein.”

Exports are also coming to play an increasingly important role in company strategy; in fact, Asahi was the first Japanese brewery to have its beer produced overseas under license. In 1971 Asahi concluded a technical assistance agreement with United Breweries of New Guinea, and a brewery was subsequently constructed at Port Moresby. In January 1986 a technology transfer agreement was reached with the San Miguel Corporation of Indonesia for the local production of Asahi beer. Another technical transfer agreement had previously been reached in 1979 with this same company for the use of Asahi’s automatic beer gauge system for beer fermentation at other plants under San Miguel control. This system had been jointly developed by Asahi and the Toshiba Corporation.

Asahi beer is now exported to more than 30 countries around the world. The United States is Asahi’s major customer, and the company now maintains offices in New York and Los Angeles to oversee its export activity. Sales to the United States account for more than 60% of Asahi’s exports, but the company’s beer is also exported to Australia, the Peoples Republic of China, the U.S.S.R., Iraq, Vietnam, and Iran (obviously, political differences with some of these countries have not interfered with the export program).

Asahi has recently entered the restaurant business. Subsidiary companies—Asahi Kyoei and New Asahi— manage more than 100 restaurants in western and eastern Japan respectively. The company has also entered into a joint venture with the American company Pizza Hut to establish Pizza Hut restaurants in Japan.

Asahi also owns subsidiary companies involved in transportation and manufacturing. The company’s four transportation subsidiaries all began as companies expressly involved in transporting and distributing only Asahi products; however, Asahi has recently initiated a program to broaden the scope of their activities. Similarly, the ShinNihon Glass Company, another subsidiary, began life as the exclusive producer of bottles for Asahi but now has clients outside the Asahi group. In fact, Shin-Nihon Glass Company has developed so many “outside” clients that most of its business is now with companies unrelated to Asahi. Other subsidiaries include the Mitsuya Foods Company, which continues to be involved in maintaining and promoting Asahi’s sales networks and in maintaining Asahi’s vending machine operations. Asahi is currently expanding its operations into such fields as printing, real estate, life and accident insurance, building management and construction.

Asahi Chemical Industry (despite their similar names, the companies were not previously related) acquired 22 million shares of Asahi Brewery in October 1981. An agreement was concluded between the two companies concerning relations involving personnel, technology, and sales. Asahi Chemical is now the major shareholder of the brewery—with a 10% holding. Only slightly more than half of Asahi’s 400 million authorized shares have actually been issued (of that number, only .08% are owned by foreigners).

Despite their relatively small share of the Japanese beer market, Asahi would seem to have a bright future. Now part of the Sumitomo Group, Asahi remains the third largest brewer in Japan, and it has recently instituted a program to revitalize its management. Most recently, company chairman Tsutomu Murai and president Hiro-taro Higuchi have devised a “New Century” plan, which they hope will both guide the company and reinforce its corporate identity well into the 21st century.