Asahi to bolster its presence in Europe with fresh investment
Asahi has started to increase its investment in Europe in a bid to take its premium beer sales to the next level.
The move, which will see the Japanese beer business following up a significant Rugby World Cup sponsorship by making a HUF100 billion (US$280 million) investment in its Hungarian unit Dreher Breweries is part of a wider plan from Asahi to grow its entire premium portfolio in the region.
Speaking to the drinks business, Asahi Europe & International communication and public affairs manager Phillip Russell confirmed: “With this series of investments, we are securing the future and competitiveness of the 170-year-old Dreher Breweries for the next decades, further demonstrating our long term strategic approach to growing our premium brands and maintaining scale across our full portfolio in Europe.”
The investment, which will include updating equipment and expanding Dreher Breweries’ storage space follows Asahi seeing its revenue growth slowing during the second quarter of 2023.
Russell told db: “Dreher Breweries is undergoing a complete overhaul along a ten-year master plan. We will work on the first milestone of a HUF100 billion investment over the next decade, in 2023-26 with a budget of around HUF30 billion. As part of this, a new energy centre will be built, the fermentation and conditioning stages in the cellars will undergo a complete renewal, involving the replacement of tanks and the introduction of new technologies.”
Speaking to db about the reasons behind the investment, Russell explained: “The investment aims not only to augment capacity and efficiency but also to fulfil the company’s rigorous legacy building and sustainability goals.
Russell added: “The success of Dreher Breweries in the previous years has enabled more investment. This has allowed the Dreher team to replace compressors and filtration equipment over the last two years. Dreher received a modernization budget of HUF4.6 billion for this, and this spring Dreher was able to invest another HUF7 billion to install a state-of-the-art aluminium can production line in Budapest. The current series of investments of HUF100 billion is on top of these investments.”
Asahi acquired Dreher in 2017 in a deal with AB InBev that included four other Eastern European breweries. However, Dreher still continues to be Hungary’s top beer company with around 30% market share.
According to reports, one of the main factors for Asahi in deciding to increase the company’s exposure to Europe is the higher percentage of premium beer sales that can be found across the region.
According to Nikkei Asia Review, Asahi saw its average unit price in the European market rise 15% year-on-year for the first nine months of 2023, compared to a unit price increase of 9.5% in Japan and 3.1% in Australia.
Despite this, Asahi’s image has been suffering, with its brands like Pilsner Urquell already being sold significantly cheaper in German supermarkets compared to the brand’s native home of the Czech Republic. This, along with its decision to withdraw Pilsner Urquell sponsorship from the Olympic Games in Paris has done little to assist Asahi’s premium brand presence. There are, however, moves to boost Asahi’s brand portfolio’s image. One example can be seen with a new deal that Asahi has just been signed for its Peroni Nastro Azzurro 0.0% beer brand to tie-up in a global partnership with Ferrari and also partner with the Ferrari Challenge Trofeo Pirelli series.
The beer giant’s overall strategy is currently being eyed by analysts and industry exports alike after it has been witnessed how it has begun to expand outside of Japan via acquisitions. A move that is primarily seen to be down to its domestic market shrinking due to the trend of young consumers looking towards more alcohol-free drinks.