China Resources Enterprise, one of Hong Kong's fastest growing red chips, is considering floating its beverage division at the end of next year as part of its long-term bid to become a conglomerate. The mainland-backed property and investment holding company said yesterday it would list CRE Beverage Co, a joint venture with South African Breweries, once its beer production capacity reached a million tonnes a year. Managing director Frank Ning Gaoning said the goal would be achievable by the end of next year or in early 1998 through acquisitions and expansion of its existing breweries. Investment will reach US$100 million. The company will expand Shenyang (Snowflake) Brewery, the second largest in China in 1994, from 250,000 tonnes to 450,000 tonnes by the end of next year. It will also invest 80 million yuan (about HK$74.4 million) to augment output capacity at newly acquired Bohai Brewery in Dalian from about 50,000 to 100,000 tonnes by July. Added investment will lift capacity to 300,000 tonnes. Mr Ning said CRE Beverage was in the final stage of talks to buy a second brewery in Dalian and another in Shenyang this year. Both are in Liaoning province. The second Dalian brewery has a capacity of about 60,000 tonnes, which will be raised to 100,000 with minimum investment to improve its facilities and efficiency. The second Shenyang brewery has a capacity of about 70,000 tonnes, which will be raised to 150,000 tonnes. From next month, the firm's brewery operations and expansion would be overseen by a senior manager hired from Europe, Mr Ning said. CRE Beverage will begin to sell its Snowflake beer in Hong Kong next month to promote the product, although Mr Ning did not see much potential for growth in Hong Kong's competitive market. In south China, where the beer market is not as promising, CRE Beverage is diversifying into other beverages. Last month it spent US$2 million for a 67 per cent share in Shenzhen C'estbon, a distilled water production and bottling company. C'estbon's strong brand name and good distribution network had allowed it to claim a 50 per cent market share in Guangzhou and Shenzhen and a 70 per cent share in Hainan, Mr Ning said. He said CRE Beverage planned to build a HK$240 million distilled water and soft-drinks plant with an output capacity of 100,000 tonnes a year in south China to help C'estbon to build its brand name. The company will franchise its brand name to under-utilised beverage firms in the region.