Suntory Beverage to Invest Actively in Emerging Markets

Tokyo, July 3 (Jiji Press)--Suntory Beverage & Food Ltd. <2587> aims to actively invest in emerging markets, its president, Nobuhiro Torii, said Wednesday, after the firm made a solid stock market debut the same day. "In many emerging economies in Asia and other parts of the world, beverage markets are still small, but disposable incomes are rising," Torii said at a news conference at the Tokyo Stock Exchange, adding, "We are ready to actively invest in these economies." Following its listing on the TSE's first section, Suntory Beverage, a key unit of Suntory Holdings Ltd., aims to become a leading company in the global soft drink market, he said. Torii added that Suntory Beverage intends to become the world's No. 3 player after top-ranking Coca-Cola Co. and second-ranking PepsiCo Inc., noting that it would be difficult for his company to catch up with the two U.S. beverage giants. In the Japanese soft drink market, meanwhile, Suntory Beverage by all means will become the biggest player, overtaking current industry leader Coca-Cola (Japan) Co., Torii stressed. Torii signaled his company's intention to expand beverage sales through vending machines and acquire domestic rivals. Suntory Beverage stock fetched the initial quotation of 3,120 yen on its TSE debut Wednesday, higher than its initial public offering price of 3,100 yen. The issue traded above the IPO price throughout the day before closing at 3,145 yen. Suntory Beverage was the second most active issue on the TSE's first section Wednesday in terms of trading value after Tokyo Electric Power Co. <9501>. Suntory Beverage's stock market debut represented the biggest IPO in Japan so far this year, with its market capitalization coming to some 970 billion yen on a closing basis. Through the IPO, the Suntory Holdings group reaped about 390 billion yen of proceeds. In 2012, Suntory Beverage earned 992.1 billion yen of sales, more than 50 pct of the Suntory Holdings group's overall sales that totaled some 1.85 trillion yen. "The brisk performance of Suntory Beverage shares gave a relief to the entire Tokyo stock market," Nobuyuki Fujimoto, market analyst at SBI Securities Co., said, calling the firm's TSE debut "very successful." Meanwhile, Masashi Oguchi of Mito Securities Co.'s Investment Information Department, said that he doubts whether the company's overseas business expansion strategy will work, citing the closed nature of the Suntory Holdings group. The Suntory Holdings group has in principle maintained its policy of keeping group companies, including the parent firm, held privately. Some 90 pct of outstanding shares in Suntory Holdings is held by a company that manages assets of members of the group's founding family. Besides Suntory Beverage, restaurant operator Dynac Corp. <2675>, which is listed on the TSE's second section, is the only other publicly traded company in the Suntory Holdings group. Oguchi said that the Suntory Holdings group seriously needs to consider further tapping the global market, as major snack maker Calbee Inc. <2229> has done. SBI Securities' Fujimoto said, "Demand for soft drinks has been sluggish in Japan amid the aging of society and the falling number of children," noting that business acquisitions will be inevitable for Suntory Beverage to grow. END