The world’s third-largest spirits maker, Suntory, will move production lines from China back to Japan because of the impact of the Coronavirus.
Mr. Takeshi Niinami, the chief executive of Suntory, has warned that the Coronavirus outbreak is hitting alcohol consumption, with a major impact on the catering industry, including restaurants and bars, which will eventually impact on Suntory’s sales and profits. “China will still be the production center, but the trend is to move production lines around the world, and Suntory will move its production lines gradually back to Japan,” Mr. Niinami said.
Suntory China has beer production lines in Kunshan, Jiangsu Province, and Shanghai respectively; the production line in Kunshan was established in 1998 and has an annual capacity of more than 200,000 tons, according to its official website. Both these 2 production lines supply only to Japan’s market. The beer Suntory sells in China is produced by Tsingtao.
Suntory sold its beer production for local use to Tsingtao in early 2015 and shifted its focus to the trading of spirits and wine. In 2012, Suntory announced the integration of its operation in Shanghai and Jiangsu into a joint venture with Tsingtao. However, in 2015, the two sides announced the dissolution of the joint venture due to inadequate cooperation and competition in the China beer market. Since then, Suntory has quit the Chinese market, while Tsingtao has continued to produce and sell Suntory beer.
Due to the impact of the Coronavirus epidemic, the significant sales channels of beer and spirits by restaurants were temporarily suspended; beer and spirits manufacturers such as Budweiser and Diageo are also facing the crisis of revenue decline. Budweiser Asia Pacific showed in its annual report that China’s revenue could decline by US$ 285 million in the first two months of 2020 compared to the same period in 2019.