Japanese brewers consider merger

If the merger goes ahead it will create the world's fifth largest food group

Japanese brewing and food groups Kirin and Suntory are considering a merger.

The move would create the world's fifth-largest food group by sales, just behind Kraft Foods and Pepsico.

Analysts welcomed the announcement, saying a merged firm would be able to dominate in Japan's fiercely competitive food and drinks market.

While Suntory is privately owned, shares in Kirin rose 8.4% following the news. If the two firms agree to merge, the deal will need regulatory approval.

"If a merger is realised, that would give them the market share to take leadership in pricing and help their soft drinks businesses - a chronic weak spot in a ultra-competitive market," said JP Morgan analyst Naomi Takagi.

"It's a huge positive if they can do it."