Tsingtao plans Thai plant in first overseas move

PUBLISHED : Wednesday, 24 October, 2007, 12:00am
UPDATED : Wednesday, 24 October, 2007, 12:00am

Tsingtao Brewery will make its first overseas manufacturing foray, setting up a plant in Thailand as the mainland's second-largest beermaker attempts to build brand awareness in the international market.

The 104-year-old brewery that is attempting to beat market leader Snow Beer yesterday said net profit rose 52.4 per cent in the third quarter on strong demand and cost controls.

Tsingtao said earnings climbed to 328.63 million yuan and sales rose 11.1 per cent to 16.34 million hectolitres in the three months to September. A hectolitre is equivalent to 100 litres.

Tsingtao said the Thai plant, which it described as a critical step in establishing an international foothold, would be set up under a 100 million yuan joint venture. It would pay 40 million yuan to hold a 40 per cent stake in the venture, the company said without giving a timetable.

The annual production capacity of the plant will be 800 hectolitres. The company's turnover from overseas markets in the third quarter increased 9.2 per cent to 495,600 hectolitres.

The Qingdao-based company, in which United States beer giant Anheuser-Busch holds a 27 per cent stake, said it would invest 396.2 million yuan to expand capacity at a malt factory in Qingdao and two plants in Guangdong.

'The expansion of the malt house is important for the company to reduce risk brought by rising prices of raw materials and guarantee quality,' the company said.

Rival Snow, jointly run by China Resources Enterprise and South Africa-based SABMiller, has overtaken Tsingtao as the No1 beer producer on the mainland.

SABMiller forecast last month that Snow was set to become the No2 beer brand in the world this year. In the first six months of this year, Snow sold 23.1 million hectolitres, up 77 per cent from last year. By comparison, Tsingtao sold 18.71 million hectolitres, up 16.2 per cent.

The mainland has the world's biggest thirst for beer with 306.2 million hectolitres produced in 2005, outstripping the US market, according to Moody's Corporate Finance.