Wellington, July 13 NZPA - New Zealand supermarket shelves are filled with the brands owned by Japanese drinks giants Suntory Holdings Ltd and Kirin Holdings Co who are reported to be considering a merger.

An unrelated takeover application currently being considered by the New Zealand Commerce Commission gives insight into the beverage market, which bidder Frucor argues is open to competition from new entrants and subject to the countervailing power exerted by large supermarket groups.

Suntory and Kirin are considering a merger to create one of the world's largest beverage and food companies, agencies reported.

The merger is being seen as part of a consolidation of the sector globally. It could create a company with similar revenue to US-based Kraft Foods and Pepsico Inc, Reuters reported.

The merged company would have a big presence in New Zealand where Kirin controls brewer Lion Nathan and Suntory controls non-alcoholic drinks maker Frucor.

The merged company would own the brands Speight's, Lion Red, Waikato Draught, Canterbury Draught, Steinlager, Mac's and a range of imported brands marketed by Lion Nathan.

It would also own Mizone, V, Just Juice, Fresh Up, McCoy, Arano, Appletiser, Citrus Tree, h2go, NZ Natural, Pepsi, Frank, Just Juice Bubbles, and milk brands Moccona and Wave.

Cerebos Gregg's is also part of the Suntory Group and it manufactures Raro and Refresh powdered drinks and owns the Robert Harris chain of cafes.

An application currently before the New Zealand Commerce Commission by Frucor to buy juice maker Simply Squeezed makes the point that the non-alcoholic beverage market here has low barriers to entry.

It also says that the two large supermarket groups exert power that counters any power resulting from the merging of beverage makers.

In the non-alcoholic beverage market Frucor is the second largest supplier in this country. It competes with Coca-Cola Amatil, the largest supplier with the "must stock" Coca Cola brand.

It also competes with Charlie's, Heinz, which distributed the Golden Circle brand, Campbell Australia, which produces the V8 juice range, Pinto, Ocean Spray, GlaxoSmithKline and Fonterra.

Frucor's target Simply Squeezed also manufactures the Pam's and Signature range of chilled orange juice and is distributor for Vitasoy, Pellegrino water, Waiwera water, Dark Dog energy drinks, Bundaberg Ginger beer and other products.

"The market is dynamic and highly innovative," the application said. A lot of new products are launched each year.

The application mentions the importance of supermarket-controlled promotional slots and supermarkets' desire to grow their home brands.

"Frucor is under no illusion in terms of the supermarkets' willingness and ability to increase the volume of housebrand fruit beverage sales if they feel the need to," the application says.

The sector in New Zealand has already been an area of merger and acquisition activity.

Frucor bought Arano in 2007, Suntory bought Frucor in 2009 and Cocoa-Cola Amatil was cleared to buy Baker Halls business this year.

Frucor argues that Charlie's is a significant competitor and Coca-Cola Amatil is a formidable competitor.

Frucor also argues that anyone can enter the New Zealand drinks market by importing product and selling through brokers.

"Frucor believes that entry could be affected in around three months".

It cites the Bundaberg brand as an example. It is wholly imported and has no real sales force on the ground but has developed a $20 million business, according to the application.