Photo/Illutration Blackmores Ltd.’s products (Provided by Kirin Holdings Co.)

Beverage giant Kirin Holdings Co. will acquire Australian natural health products maker Blackmores Ltd. for 1.88 billion Australian dollars (167.59 billion yen, or $1.24 billion) in a major diversification push, it announced on April 27.

Kirin will acquire all shares of the company in August and make it a wholly owned subsidiary, according to Kirin officials.

The move comes as Japan’s beer market shrinks due to the country’s declining population, pushing Kirin to search for other paths to profit. The strategy here is to shore up its position by investing in a countervailing arm of its business centering on selling health-conscious products.

At a news conference on April 27, Takeshi Minakata, head of the health science division at Kirin, said the new acquisition operates in “such a high growth sector” and will position Kirin to “become a leading company in health science in the Asia and Pacific region.”

Founded in 1932, Blackmores operates in 12 countries and regions outside Australia and sells a range of products, including supplements and powdered milk.

Australia and New Zealand account for just under half its sales, with Southeast Asia and others making up 30 percent and China 25 percent.

The company’s sales for fiscal 2023 are predicted to reach 59.7 billion yen ($445 million).

Kirin’s plan is to expand the range of products containing the company’s unique, secret-sauce ingredient called Lactococcus lactis strain plasma, which is a strain of lactic acid bacteria, by using Blackmores’ brand, sales channel and expertise in food regulation.

Kirin will provide Blackmores with technology to develop new beverages, and Fancl Corp., Kirin’s health food subsidiary, will jointly develop products with Blackmores, company officials said.

Blackmores’ board of directors is endorsing the acquisition, which will be complete once it gains approval from its shareholders and an Australian court.

Kirin will secure funding for the acquisition through a loan and cash it already has on hand.

But some of Kirin’s overseas business ventures have fizzled out. 

It acquired a Brazilian beer company for around 300 billion yen in 2011, but poor sales forced it to sell the beer firm and withdraw from the Brazilian beer market some years later.

Just last year, the company decided to sell its shares in a beer company in Myanmar, which has been mired in political turmoil and violence since the military junta took control of the government in a coup in 2021.

“People might remember some (of Kirin’s overseas) deals that didn’t work out,” Kirin’s Chief Financial Officer Shinjiro Akieda said at the April 27 news conference. But Akieda quickly pointed to other successes, such as its acquisition of an American craft beer company.

“We have experienced both successes as well as failures (overseas) but our company has accumulated lessons learned, and that led to this acquisition,” he said. “We are determined to succeed in this acquisition by making the best use of what we have learned.”

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