CRB advances national push with Guangdong brewery
China Resources Brewery (CRB) will pour 680 million yuan into a new facility in Guangdong province, as part of its strategy to become a national player.
The 300,000-kilolitre plant in Dongguan, which will produce its first bottle of beer in 2006, will increase the brewer's annual capacity by nearly 48 per cent to 5.3 million kilolitres.
Construction is slated to begin in November.
'This will complete our [national] network,' said China Resources Enterprise's executive director Francis Kwong Man-him yesterday. 'Entering the southern China market is a big step for us.'
CRB, a joint venture between China Resources and SABMiller, is strongest in China's northern and northeastern markets, where its flagship Snow brand has a loyal following. It also has plants in the southwestern, eastern and central regions.
The move into Guangdong is a direct challenge to Harbin Brewery Group and Tsingtao Brewery, both of which have strategic relationships with SABMiller rival Anheuser-Busch, in a tussle for nationwide dominance in a market that remains highly fragmented.
Guangdong, the second-largest market in the mainland, produces about 8 per cent of the country's beer or 1.95 million kilolitres.
With an integrated national network in place, SABMiller can capitalise on CRB's facilities to produce and distribute its Miller brand of beers.
'The cities of Dongguan, Shenzhen and Guangzhou will be important future markets for CRB's Snow brand, and our international premium brands such as Miller Genuine Draft,' said Andre Parker, SABMiller's Africa and Asia managing director.
CRB is paying US$27 per hectolitre for its new plant, compared with the $63 a hectolitre Anheuser-Busch paid for Harbin Brewery, according to ABN Amro.
A greenfield brewery investment was 'cheaper than buying into a brand', Macquarie Securities analyst Lilian Leung said.
Acquiring mainland brands has become an increasingly costly proposition, as foreign brewers compete for the most popular local breweries in order to get a head start in the market.
