Myanmar Military’s Joint Venture Brewery to be Dissolved After Product Boycott

By The Irrawaddy 24 November 2021

Myanmar Brewery Co, which once manufactured the best-selling beer brands in Myanmar, is to be dissolved. The company is a joint venture between Japanese beverage giant Kirin and the military-owned conglomerate Myanma Economic Holdings Public Co. Ltd (MEHL).

On November 19, MEHL made an application to the Yangon Region Western District Court to dissolve the joint venture under the Myanmar Companies Law.

Kirin bought a 51 per cent stake in Myanmar Brewery from MEHL in 2015 for over US$560 million, becoming the major stakeholder.

It added new brands, Kirin Ichiban, Andaman Gold and Black Shield Stout, to the existing product portfolio, resulting in Myanmar Brewery winning 80 per cent of the market share in the country’s beer market.

However, its profits plunged by almost 50 per cent year-on-year in the third quarter of 2021 after the junta’s February 1 coup, as the Myanmar people continue to boycott military-linked products as part of a campaign to sever the coup leaders’ financial lifelines.

Following the coup, Kirin came under international pressure to end its partnership with the Myanmar military.

“Although the company is dissolved, it seems that manufacturing won’t cease. The brands they are producing may be handed to another company and they may set up a new joint venture,” a corporate lawyer working for international firms told The Irrawaddy.

As the Myanmar Brewery’s beer brands were formerly top-sellers in Myanmar, and sale volumes only dropped after the coup, the military regime might try and distance itself from those brands by producing them under a different name, suggested the lawyer.

“All the Myanmar people view that company as being associated with MEHL. So they might form a new company and continue to produce those products,” he said.

Kirin’s 2021 third quarter financial report, published earlier this month, stated that Myanmar’s beer market had shrunk, with sales volumes hit by the COVID-19 pandemic, “political upheaval” and supply chain disruptions. Myanmar Brewery’s sales volume was down over 30 per cent compared to the same period last year.

Normalized operating profit was down 49.4 per cent year-on-year “due to lower sales volume and increased raw material costs, among other factors”.

The Japan drinks giant stopped making dividend payments to MEHL last year, after it was condemned by international rights groups for its partnership with Myanmar’s military amid accusations of genocide against the Rohingya.

In 2019, Kirin’s Myanmar business recorded an operating profit of US$115 million (161.84 billion kyats), according to the company.

After the coup, Kirin announced that it was ending its partnership with MEHL, citing deep concerns over the actions of the Myanmar military, which it said ran counter to the company’s standards and human rights policy.

Kirin said in its third quarter report that it was preparing and considering all possible means to terminate its partnership with MEHL by the end of 2021.

Over ten foreign firms including Norwegian telecom operator Telenor, German food giant Metro, India’s largest port operator Adani, Switzerland’s Kempinski Group, Australia’s Myanmar Metals Limited, Britain’s British American Tobacco Myanmar have ceased their operations in Myanmar since the military takeover.

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