Business Jul. 13, 2009 - 10:51AM JST ( 6 )

TOKYO —

Kirin Holdings Co and Suntory Holdings Ltd have begun negotiating a merger aimed at surviving a shrinking beverage market amid a low birthrate and aging population in Japan, sources close to the matter said Monday.
 
A merger would create the world’s fifth largest food company by sales, just behind Kraft Foods Inc and Pepsico Inc, the Nikkei business newspaper reported.
 
It also would help the companies overcome a saturated domestic market with an aging population and compete more strongly with large international brands.
 
“A merger is one possibility we are considering,” said Kuzaki Kitahara, a spokesman at Suntory Holdings Ltd.
 
Kirinsaid in a news release it already cooperates with Suntory in areas such as distribution and procurement, but it said nothing concrete has been decided about a merger.
 
The comments came Monday after Japanese media reports that the two companies were considering combining their operations. The Nikkei business newspaper, without citing sources, reported that they aimed to complete a deal this year.
 
Privately held Suntory is well known for its whisky and beer products.
 
Kirin, Japan’s largest food and beverage company, is best known domestically as a beer and soft drink producer. It also owns major food and alcohol producers in Australia and throughout Asia.
 

Wire reports