Going global: functional foods keiretsu

Prepared Foods, August, 2005 by Claudia D. O'Donnell

Giant mergers among North American-based companies are big news. Thousands of people are affected, and such business changes influence marketing, distribution and new product development initiatives. Similarly in Japan, the formation of a keiretsu is of enormous importance. Keiretsus are conglomerates often unified more by tradition and custom than by formal legal ties. Commonly, a cross-holding of shares ("interlocking shares") takes place with group-affiliated firms issuing shares to member firms.

Prepared Food's June 20, 2005, e-newsletter reports that three Japanese companies, Kirin Brewery Company Ltd., Yakult Honsha Co. Ltd. and Kirin Beverage Corporation, formed a business alliance centering on health foods and functional foods. Kirin Beverage acquired 1.40% of Yakult Honsha's outstanding shares for some $46 million; Yakult Honsha acquired 0.44% of Kirin Brewery's outstanding shares for about $41 million and 0.36% of Kirin Beverage's outstanding shares for some $4.6 million. Key aspects of the alliance include shared manufacturing, distribution and certain promotional operations in the growth areas of health and functional foods. The group will make use of R&D capabilities gained through their beverage, food and pharmaceutical businesses.

Interesting new product launches already have appeared. For example, Mintel's GNPD reports that Yakult Honsha introduced a lactic acid bacteria drink that is said to lower high blood pressure under the Pletio brand in the spring of 2005. It contains 10mg of GABA (gamma amino butyrate) per 100ml as well as L. casei Sirota and Lactacoccus lactis. In 2003, Kirin Brewery's Koiwai Dairy Products launched a yogurt said to have "Bb-12 bacteria and 5g of beer enzymes." It will he intriguing to see what products a yogurt keiretsu will produce.

--Claudia D. O'Donnell, Chief Editor