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Asahi Group Holdings Limited: Global Expansion Versus Financial Leverage
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Reference: IVEY-W26041-E
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Year: 2021
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Number of pages: 15
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Geographic Setting: Japan
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Publication Date: May 3, 2022
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Source: Ivey Business School (Canada)
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Type of Document: Case
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Industry Setting: Manufacturing
Description
In May 2021, Asahi Group Holdings, Limited (Asahi), a Japanese global beer, spirits, soft drinks, and food company, shifted its focus to non-alcoholic beers. The shift was made after spending US$20 billion to acquire premium beer brands from Anheuser-Busch InBev SA/NV, a Belgian multinational drinks and brewing company.
The Japanese beer market had been shrinking for decades with Japan’s declining population, and more recently, the market had shrunk further because of restrictions imposed during the ongoing COVID-19 pandemic. In response, domestic beer producers were looking abroad for better market opportunities.
Asahi needed a strategy to compete against the Belgian beer giant. Considerations included whether to pursue growth in Asahi’s core beer business or diversify in the food industry, how to position a growing portfolio of products to minimize cannibalization, whether to shift focus from the premium to the lower-mass beer market, and how to approach the potential Chinese beer market. Regardless of growth strategy, Asahi needed to deal with a loss in share value, triggered by investors nervous about Asahi’s acquisition spree. To regain investor trust, Asahi needed to manage its financial leverage.
The Japanese beer market had been shrinking for decades with Japan’s declining population, and more recently, the market had shrunk further because of restrictions imposed during the ongoing COVID-19 pandemic. In response, domestic beer producers were looking abroad for better market opportunities.
Asahi needed a strategy to compete against the Belgian beer giant. Considerations included whether to pursue growth in Asahi’s core beer business or diversify in the food industry, how to position a growing portfolio of products to minimize cannibalization, whether to shift focus from the premium to the lower-mass beer market, and how to approach the potential Chinese beer market. Regardless of growth strategy, Asahi needed to deal with a loss in share value, triggered by investors nervous about Asahi’s acquisition spree. To regain investor trust, Asahi needed to manage its financial leverage.
Learning Objective
The case is intended for senior undergraduate or graduate-level courses on mergers and acquisitions, global business strategies, competitive strategies, and marketing strategies. After completing this case, students will be able to do the following:
- Recommend competitive strategies in a global consolidated market.
- Recommend a growth strategy through geographical, market/industry, and product diversification.
- Evaluate cannibalization risks and recommend an appropriate brand strategy to mitigate the risks.
- Evaluate the impact of acquisitions on corporate growth and financial leverage, and recommend an appropriate growth strategy.