Cyberattack leaves Asahi struggling as rival brewers gain ground

AS JAPAN gears up for its busiest beer-drinking season, the country’s largest brewer is struggling to stay on tap - with its systems still crippled more than a month after a cyberattack disrupted its supply chain.

The ransomware attack on Asahi Group disabled its internal system that handled all orders and shipments online. As an emergency measure, the company reverted to processing them manually - in person, over the phone, and even by fax, a technology largely considered obsolete in modern business.

The shift has severely slowed operations, with shipments currently at just 10 per cent of normal levels, according to an Asahi spokesperson. The timing couldn’t be worse: December is typically its strongest month with Super Dry alone accounting for 12 per cent of its annual sales volume.

The attack on Asahi is part of a broader wave of cyber incidents hitting Japanese companies. Askul recently suffered a breach that disrupted its e-commerce platform, and Nikkei reported a virus infection via Slack chat platform that may have exposed employee and business partner information.

In Tokyo’s salaryman hub of Shimbashi, Kohei Matsuo runs Bier Reise ’98, a bar that used to rely on Asahi’s Maruefu beer for 80 per cent of its sales. Within a week of the attack, he was out of stock and had no choice but to pivot to other domestic and imported brands.

“If supply doesn’t recover and I have to suspend the all-you-can-drink plan, it’s likely to hurt year-end party attendance,” Matsuo said.

Over in Ueno, manager Hiroyuki Iida of Izakaya Ueno Ichiba Honten said his restaurant briefly switched to beers from Sapporo Holdings and Suntory Holdings before Super Dry shipments resumed. But other Asahi products - like non-alcoholic beer and Maruefu are still missing.

“Wholesalers may be prioritising larger volume accounts,” he said, adding that the impact has been milder than feared.

Competitors are seizing the opportunity. Kirin Holdings, Suntory and Sapporo have been replacing Asahi’s dispensing units and branded glassware through wholesalers, making it harder for bars to switch back once supply normalises.

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Sanford C Bernstein Japan’s analyst Euan Mcleish expects Sapporo to benefit most, thanks to its full-malt lineup.

Asahi lost its No. 1 spot in Japan’s retail beer market to rival Kirin, which surged ahead after Oct 6, led by strong sales of its Ichiban Shibori brand, according to point-of-sale data from the Nikkei newspaper.

Kirin said is adjusting shipments of certain commercial products to ensure a stable supply of its main offerings as demand surges, while Suntory said it has been receiving numerous inquiries from distributors and is adjusting shipments while responding to stronger-than-expected demand. Sapporo didn’t immediately respond to a request for comment.

Interestingly, retail stores paint a more forgiving picture.

Some outlets of discount chain OK Corp in central Tokyo still have Super Dry and Maruefu in stock, even as shelves of other Asahi products are beginning to sit bare.

Major convenience stores — Seven & i Holdings, FamilyMart and Lawson Inc - also show healthy supplies of Super Dry, though shortages are emerging for soft drinks and private-label beverages and Monster Beverage Corp.’s energy drinks supplied by Asahi.

Gift packs

Online, Amazon Japan lists a 24-pack of Super Dry for 5,040 yen (S$42.60). Aeon’s gift shop offers a 10-can package for 2,380 yen, with a delivery scheduled between Dec 1 and Jan 10.

But department store websites like those of Isetan Mitsukoshi Holdings and Takashiyama show Asahi gift items such as beer packs as out of stock - disrupting a Japanese custom where businesses and individuals exchange premium foods and beverages to express gratitude and appreciation. 

Bernstein’s Mcleish on Oct 29 cut Asahi’s core operating profit forecast to a 15 yen billion loss for the fourth quarter, citing the disruption and higher marketing costs to win back customers. He expects the brewer to miss its full-year guidance by 13 per cent.

Asahi was scheduled to report third-quarter earnings on Nov 12 but has postponed the release indefinitely, citing delays in settlements and trouble accessing financial data. 

Asahi’s recovery has been hampered by a patchwork of old-fashioned systems inherited through years of acquisitions, which it was trying to integrate into a single platform when it became the target of the cyberattack, said Tetsutaro Uehara, professor of information technology and engineering at Ritsumeikan University.

“They are still in a process of integrating,” said Uehara. “That’s where they were vulnerable.”

Fiercely loyal

Japan’s beer market has been evolving. Domestic consumption is stagnating as the population ages and shrinks, prompting brewers to expand overseas. Still, the home market remains vital - accounting for 46 per cent of Asahi’s total revenue last year.

While retail sales may cushion the blow, missing out on bars and restaurants during the year-end season could have lasting consequences. On-premise sales are key to building brand loyalty, and once a tap is replaced, it’s not always easy to win it back.

Yet some customers remain fiercely loyal. Matsuo of Bier Reise ’98 said he’s been a loyal customer of Asahi for decades and isn’t considering switching to other brands in the long run. 

“I believe it will rise again like a phoenix,” he said. BLOOMBERG