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SCMP Reporter

SYNERGY may be an over-worked word when it comes to mergers and acquisitions but it could rightly be applied to the deal through which the world's biggest brewer has taken a stake in potentially the second-biggest beer market in the world.

  Anheuser-Busch of the United States yesterday announced its landmark move to buy a five per cent interest in Tsingtao Brewery.

   Despite the fierce competition in the international beer market, the temptations for both parties to come together remain great.

  The Chinese beer market has grown at a 14 per cent rate over the past five years and is projected to have a 10 per cent annual growth for the foreseeable future.

   The mainland is currently the world's third-largest beer market and is likely to overtake Germany to become second only to the United States within a couple of years.

  It is also expanding very rapidly, with a young population with rising per capita incomes.

      On the other side of the world, Americans, as the largest consumers of beer, down an estimated 20 million tonnes annually.

  The US has fast become one of Tsingtao's three largest export markets.

  As figures show, the equity deal will be to the mutual benefit of the two brewery heavyweights.

   The deal is the fourth so far this year by the Budweiser maker in its strategic plans to expand internationally.

  Earlier this month, it completed a 17.7 per cent investment in Mexico's top brewer, Grupo Modelo.

  In March, it announced a joint venture with Japan's number one brewer, Kirin, to market, sell and distribute Budweiser in that country.

  A month later, Anheuser-Busch struck an agreement with Italy's major brewer, SpA Birra Peroni Industriale, to market and distribute Budweiser.

    Officials with the American beer producer expect there will be negotiations over the next few months on marketing and joint production ventures in China.

     Anheuser-Busch could give Tsingtao a contract to produce its beer in China or there might be investment in new breweries.

   The fascinating aspect of the Chinese beer market is that, after Tsingtao, there are another 859 possible brewery listings or joint ventures.



This Bud's for China