- Yesterday, Guinness Anchor Bhd (GAB) announced the addition of a new super premium brand –Kirin Ichiban – to its portfolio. This follows the group’s signing of a 5-year partnership deal with Kirin Brewery which is under the purview of Kirin Holdings Co., Japan’s biggest beverage maker. (Kirin Holdings has a 15% stake in Asia Pacific Breweries and a joint venture agreement with Heineken International, which are GAB’s parent companies.)

- Kirin Ichiban is a 5% abv pale lager, which is made with an all-malt formula and the unique firstpress brewing process or “Ichiban Shibori”. It is GAB’s maiden Japanese product and also its first new brand in 5 years. The group’s previous launches in December 2013 were line extensions, namely Tiger Radler and new variants of Heineken.

- The entrance of Kirin Ichiban into the domestic malt liquor market (MLM) means that Malaysian drinkers now have access to three of the four major Japanese brands. The new beer is wellpositioned to compete with Carlsberg Brewery (M) Bhd’s (CAB) (HOLD, FV: RM13.80/share) Asahi Super Dry, which has enjoyed a strong reception since its launch in 2011. The other brand in the local market is Sapporo, which is distributed by Azio Wines and Spirits Sdn Bhd.

- This launch is consistent with management’s earlier stated intention to strengthen its product portfolio in a bid to:- (1) combat the lacklustre domestic MLM volumes; (2) shore up its margins; and (3) ensure it remains the market leader post the current tough period.

- We believe the addition of a super premium beer to GAB’s product line is a step in the right direction as most of the successful roll-outs have come from this segment’s higher price point brands (20%-30% above mainstream’s). Consumers in the top-end MLM segment are purportedly the least price sensitive and of a more favourable demographic.

- Growth in this segment will also be supported by the rising number of modern on-trade (MOT) outlets in Malaysia. According to GAB’s management, MOT consumption had grown by 10% YoY. At present, the super premium segment, which makes up 11% of the local MLM is dominated by CAB.

- No change to our earnings estimates at this juncture. We reiterate our HOLD recommendation and fair value of RM15.40/share on the stock. We understand that GAB is expected to introduce 5 more brands/line extensions in the following 12 months, with the next launch in 2-3 months’ time.

Source: AmeSecurities