Fueding Brazilian Brewers Bitter Over Sale To Japan Beer Giant Kirin

In its thirst for foreign markets, Japanese brewer Kirin recently purchased a controlling share in Brazil’s second-largest beer producer. But not only did Kirin “overpay,” it also stepped unwittingly into the middle of a long-simmering family feud.

Devassa, a popular brand of Brazilian beer that could soon be owned by Japan's Kirin
Devassa, a popular brand of Brazilian beer that could soon be owned by Japan's Kirin
Paula Pacheco

SAO PAULOWith a population of just 157,000 inhabitants, Itu is a relatively small city. And yet it's best known in Brazil for some very large things: it has a famous oversized telephone booth, an enormous stoplight and stores that sell disproportionately big key-rings and pencils. The city located in the center of the state of Sao Paulo, is also home to a gigantic family dispute – one that encapsulates many of Latin America's corporate governance problems.

Last August, Itu's Gilberto, Daniela and José Augusto Schincariol filed a lawsuit against their cousins, Adriano and Alexandre Schincariol. Not long before, the defendants in the case sold their investment company, Aleadri-Schinni, to the Japanese beverage firm Kirin for $2.57 billion. Aleadri-Schinni controls 50.45% of the shares of Schincariol, Brazil's second-largest beer producer. The other 49.55% belongs to an investment firm called Jagandil, owned by Gilberto, Daniela and José Augusto. The plaintiffs insist they have a right of first refusal for their cousins' stocks. The judge has accepted the suit and temporarily suspended the sale to Kirin.

This is the latest chapter in an unfolding family drama that first begin in 2003 when Nelson Schincariol, grandson of the giant beer company's founder, was mysteriously murdered in his Itu home. Since then, Schincariol has been fraught by disagreement between Nelson's heirs and those of his brother, Gilberto.

The sale to Kirin surprised a lot of Brazilians. The public was aware that Adriano Schincariol was talking to the British companies SABMiller and Diageo, and to Danish companies Carlsberg and Heineken. Many observers assumed that Heineken would end up with the company.

A costly foot in the door

According to Brazilian analysts, the Japanese company paid a surprisingly high amount for the company – about 17 times Schincariol's gross annual earnings. A "normal" sale price would have been about 10 times annual earnings. The price was especially high considering Schincariol – under the brands Schin, Devassa and Badem – controls just 11% of Brazil's beer market.

Whether it overpaid or not, Kirin – assuming the court injunction is eventually lifted – will have a solid foot in the door of Brazil's $9 billion beer market. With this acquisition, the Japanese company is also able to avoid costly investments in distribution networks, infrastructure and brand creation. "It's a rare opportunity to buy an influential company," said Senji Myake, the Japanese multinational's CEO, speaking in Tokyo at the press conference that announced the sale.

International expansion is key for the company's future success given problems in Japan's domestic beer market, which has been stagnant. Last years overall sales even fell – by 3.5%, according to data from the consulting firm Dealogic. Since 2005, Kirin has invested $12 billion in acquisitions. Foreign brewers, now under the Kirin umbrella, include Hangzhou Qiandaou, a Chinese company; the Filipino firm San Miguel; and Australia's Lions Nathan. Bloomberg reports that Kirin earned 23% of its revenue last year from foreign subsidiaries, up from 14% in 2005.

Ensuring a return on its investment in Brazil, however, may prove to be easier said than done. Schincariol has had a turbulent recent history with significant commercial ups and downs. That's not to mention the company's still brewing family feud.

Read more from AméricaEconomía in Spanish

Photo - BemDevassa

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How Thailand's Lèse-Majesté Law Is Used To Stifle All Protest

Once meant to protect the royal family, the century-old law has become a tool for the military-led government in Bangkok to stamp out all dissent. A new report outlines the abuses.

Pro-Democracy protest at The Criminal Court in Bangkok, Thailand

"We need to reform the institution of the monarchy in Thailand. It is the root of the problem." Those words, from Thai student activist Juthatip Sirikan, are a clear expression of the growing youth-led movement that is challenging the legitimacy of the government and demanding deep political changes in the Southeast Asian nation. Yet those very same words could also send Sirikan to jail.

Thailand's Criminal Code 'Lèse-Majesté' Article 112 imposes jail terms for defaming, insulting, or threatening the monarchy, with sentences of three to 15 years. This law has been present in Thai politics since 1908, though applied sparingly, only when direct verbal or written attacks against members of the royal family.

But after the May 2014 military coup d'état, Thailand experienced the first wave of lèse-majesté arrests, prosecutions, and detentions of at least 127 individuals arrested in a much wider interpretation of the law.

The recent report 'Second Wave: The Return of Lèse-Majesté in Thailand', documents how the Thai government has "used and abused Article 112 of the Criminal Code to target pro-democracy activists and protesters in relation to their online political expression and participation in peaceful pro-democracy demonstrations."

Criticism of any 'royal project'

The investigation shows 124 individuals, including at least eight minors, have been charged with lèse-majesté between November 2020 and August 2021. Nineteen of them served jail time. The new wave of charges is cited as a response to the rising pro-democracy protests across Thailand over the past year.

Juthatip Sirikan explains that the law is now being applied in such a broad way that people are not allowed to question government budgets and expenditure if they have any relationship with the royal family, which stifles criticism of the most basic government decision-making since there are an estimated 5,000 ongoing "royal" projects. "Article 112 of lèse-majesté could be the key (factor) in Thailand's political problems" the young activist argues.

In 2020 the Move Forward opposition party questioned royal spending paid by government departments, including nearly 3 billion baht (89,874,174 USD) from the Defense Ministry and Thai police for royal security, and 7 billion baht budgeted for royal development projects, as well as 38 planes and helicopters for the monarchy. Previously, on June 16, 2018, it was revealed that Thailand's Crown Property Bureau transferred its entire portfolio to the new King Maha Vajiralongkorn.

photo of graffiti of 112 crossed out on sidewalk

Protestors In Bangkok Call For Political Prisoner Release

Peerapon Boonyakiat/SOPA Images via ZUMA Wire

Freedom of speech at stake

"Article 112 shuts down all freedom of speech in this country", says Sirikan. "Even the political parties fear to touch the subject, so it blocks most things. This country cannot move anywhere if we still have this law."

The student activist herself was charged with lèse-majesté in September 2020, after simply citing a list of public documents that refer to royal family expenditure. Sirikan comes from a family that has faced the consequences of decades of political repression. Her grandfather, Tiang Sirikhan was a journalist and politician who openly protested against Thailand's involvement in World War II. He was accused of being a Communist and abducted in 1952. According to Sirikhan's family, he was killed by the state.

The new report was conducted by The International Federation for Human Rights (FIDH), Thai Lawyer for Human Rights (TLHR), and Internet Law Reform Dialogue (iLaw). It accuses Thai authorities of an increasingly broad interpretation of Article 112, to the point of "absurdity," including charges against people for criticizing the government's COVID-19 vaccine management, wearing crop tops, insulting the previous monarch, or quoting a United Nations statement about Article 112.

Activist in front of democracy monument in Thailand.

Shift to social media

While in the past the Article was only used against people who spoke about the royals, it's now being used as an alibi for more general political repression — which has also spurred more open campaigning to abolish it. Sirikan recounts recent cases of police charging people for spreading paint near the picture of the king during a protest, or even just for having a picture of the king as phone wallpaper.

The more than a century-old law is now largely playing out online, where much of today's protest takes place in Thailand. Sirikan says people are willing to go further on social media to expose information such as how the king intervenes in politics and the monarchy's accumulation of wealth, information the mainstream media rarely reports on them.

Not surprisingly, however, social media is heavily monitored and the military is involved in Intelligence operations and cyber attacks against human rights defenders and critics of any kind. In October 2020, Twitter took down 926 accounts, linked to the army and the government, which promoted themselves and attacked political opposition, and this June, Google removed two Maps with pictures, names, and addresses, of more than 400 people who were accused of insulting the Thai monarchy. "They are trying to control the internet as well," Sirikan says. "They are trying to censor every content that they find a threat".

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