Kyowa Hakko Kogyo Co., a major manufacturer of fermented chemicals, has agreed to sell off its alcoholic beverage operations, which have accounted for roughly a quarter of its consolidated sales, to Asahi Breweries Ltd., the two companies said Monday.

Under the agreement, Kyowa Hakko's liquor sales division, which deals with such products as "shochu" distilled spirits, low-alcohol drinks and wine, will be sold to Asahi Breweries by the end of 2002, they said in a statement.

As for its liquor production business, Kyowa Hakko will spin off its two production plants -- one in Ibaraki Prefecture and the other in Fukuoka Prefecture -- into a joint venture with Asahi by the end of the year.

The new venture will initially be 60 percent owned by Asahi, but will become Asahi's wholly owned subsidiary in 2005, they said.

Kyowa Hakko will also sell all of its stakes in its three liquor production subsidiaries -- Sainte Neige Wine and two sake makers -- to Asahi.

Kyowa Hakko's alcoholic beverage businesses, which accounted for 27 percent of its consolidated sales as March 2000, generated revenues of 38.59 billion yen with an operating loss of 263 million yen in the fiscal year which ended in March 2001.