The talks could allow Kirin, which already owns a 46 per cent stake in Australia's second largest brewer, Lion Nathan, to further diversify its operations away from its core alcohol business towards dairy and non-alcoholic goods.

Such a move would see Kirin join a number of its rivals within food and beverage production in expanding outside of its core operations to offset possible potential declines in the value of more established products.

National Foods was purchased by San Miguel for $1.7bn (€1.3bn) in 2005. It produces a variety of Australia's leading dairy brands, including cheese label Tasmanian Heritage and the license in the country for the Yoplait brands.

Claiming a stake in the group could therefore prove a prudent strategy if the Australian dairy market continues its recent growth momentum.

Between 2001 and 2006 the markets for yoghurts and non-milk dairy products in Australia have risen by 50 per cent and 34 per cent respectively, according to consumer analyst Euromonitor.

This increase has allowed the industry to offset a slow down within growth of milk products that rose just 14.3 per cent respectively.

The talks are a continuation of the already fruitful partnership between the two companies, with Kirin holding a 20 per cent stake in San Miguel's operations.

They could also allow Kirin to expand its product portfolio of functional and dairy goods.

Since June 2005, Kirin has been in a formal collaboration with Japanese dairy group Yakult to produce functional and well being products in the country.