SABMiller in new Chinese beer venture

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The Independent Online

SABMiller, the world's second-largest brewer, took steps to reassert its position in the Chinese beer market yesterday, announcing an investment in a new $82m brewery.

SABMiller, the world's second-largest brewer, took steps to reassert its position in the Chinese beer market yesterday, announcing an investment in a new $82m brewery.

Through its joint-venture with China Resource Enterprise, a retail, beverage and oil conglomerate, SABMiller will contribute 49 per cent of the total needed for the brewery in the south-eastern province of Guangdong. In the city of Dongguan, it will be able to produce about 3 million hectolitres annually. The venture will use CRE's retail outlets to distribute its beer.

The brewer suffered a knock-back in its ambitions in the Chinese beer market - one of the world's largest and fastest-growing - earlier this year when it lost a $552m bidding battle for the Harbin Brewery Group.

Anheuser-Busch, which is behind the Budweiser brand, took a stake in Harbin to rival that already owned by SABMiller. This prompted a takeover duel that ended in Anheuser's bid being successful and SAB severing its links with Harbin. It is nonetheless already the second-largest brewer in China, with a market share of 11 per cent.

A spokesman for SAB said: "We are already strong in the north-east and north-west. The south-east is economically a very active region so we looked at opportunities there. We did consider other possibilities, but thought the most effective way was to build from a greenfield site."

Guangdong is one of China's wealthiest and most developed provinces, incorporating the Pearl River delta and home to 79 million people. It accounts for about 8 per cent of China's total beer sales.

SABMiller is one of a number of foreign brewers keen to boost their market share in China. While the US and European beer markets are flat, with growth of little more than 2 per cent, sales in China are growing at more than 6 per cent annually, estimates suggest. Carlsberg last month bought stakes in four Chinese breweries, and Interbrew, which is behind the Stella Artois and Becks beer brands, bought the Zhejiang Shiliang Brewery for $53m.

Construction of SABMiller's brewery in Dongguan will start in November. It is expected to be operational in 2006. A spokesman said the group was still on the lookout for opportunities to strike new deals or begin new developments in China.

Shares in SABMiller yesterday closed up nearly 1 per cent at 681p.

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