July 13/Tokyo, Japan/Associated Press Financial Wire -- Japan's top two beverage makers, Kirin and Suntory, are considering merging their operations, a Suntory spokesman said.

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.

Kirin Holdings Co. said 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 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.

From the July 20, 2009, Prepared Foods E-dition