CSI plans sale of beer stake to Japanese firms

PUBLISHED : Saturday, 08 January, 1994, 12:00am
UPDATED : Saturday, 08 January, 1994, 12:00am

CHINA Strategic Investment (CSI) is selling 75 per cent of its stake in a beer subsidiary to two major Japanese companies for US$35 million in a move to raise the international profile of its mainland beer business.

Under a deal to be finalised at the end of the month, Asahi Breweries will have a 45 per cent stake and Itochu Corp 30 per cent, giving the new partners not only a controlling stake but also management rights in three of CSI Brewery's mainland breweries.

The money from the Japanese buyers will go into capital investment and technology transfers for licensed production of Asahi beer, reportedly the second most popular brand in Japan.

Asahi and Itochu, a trading company, intend to double production at the three breweries in Zhejiang and Fujian provinces to 600 million litres by 1996, with the aim of becoming the largest brewing group on the mainland.

''The licensing agreement with Asahi would add more credibility to our brand names,'' said a CSI spokeswoman yesterday.

The latest deal means that the CSI will retain control over its breweries in Shandong province and Beijing.

Originally, CSI chairman Oei Hong Leong was to form China Brewery Holdings to put all its mainland breweries under one holding company with the eventual aim of listing it in New York.

He added that some $500 million would be spent to beef up the production and profitability of the mainland breweries before seeking a listing.

The spokeswoman said that with the latest deal it would be up to Asahi and Itochu to decide whether or not to go ahead with the listing plans.

She said that CSI did not include Beijing Brewery in the Asahi-Itochu deal as the former bought into the brewery recently.

Last November, CSI announced that it would take a 55 per cent stake in a $52 million joint venture with Beijing Brewery, which has been in the draught and super dry beer business for over 40 years.

Asahi is not the only famous foreign brand jumping into the Chinese beer market. US giant Anheuser-Busch took a five per cent stake in Tsingtao last summer while the Foster's Brewing Group announced that it would spend $170 million over the next five years to expand production at its joint venture breweries in Shanghai and Doumen.

San Miguel, Carlsberg, Bauerei Beck, Pabst Blue Ribbon and Holstein have either signed joint venture or licensing agreements with Chinese partners.