House Foods have announced that they will transfer their water business, worth 5.3bn yen (£37m), to Asahi Soft Drinks. Asahi will sell House’s “Rokko no Oishi Mizu”, one of Japan’s leading water brands, from July this year.
For the last few years the Japanese mineral water market has been highly competitive among the major Japanese brands such as House’s “Rokko,” “Ten nen sui” from Suntory, and Kirin’s “Arukari ion no Mizu”, and profitability has been rapidly declining because of a combination of falling retail prices and increasing logistics costs.
House Foods’ business strategy now focuses on overseas investment, health foods and direct sales channels such as internet shopping. So it has decided to offload its mineral water business to another company.
Asahi is aiming towards a 10% share of the Japanese soft drinks market and is keen to develop new core brands. It looks as though this move is motivated by these plans. The company says that while the overall mineral water market in Japan did not grow significantly in 2009, domestic brands have indeed been increasing (4% last year) over declining sales of imported waters (down 10%), indicating that they think domestic brands such as “Rokko” are likely to have continuing opportunities for future growth in the market. Watch this space!