CR Snow in bargain deal for Fujian brewer
Mainland beer maker China Resources Snow Breweries (CR Snow) has claimed a deal-making coup by buying an 85 per cent stake in Quanzhou Qingyuan Brewery for just US$8.9 million.
The price for control of the small Fujian-based brewer translated into an entry cost - including upgrades - of between US$8 and US$10 per hectolitre of beer, against start-up costs for a new mainland production line that could range from US$20 to US$30 per hectolitre, said Francis Kwong, executive director of China Resources Enterprises (CRE).
'The investment and upgrade is still lower than the cost of building a new plant,' Mr Kwong said.
CR Snow is a joint venture 51 per cent held by CRE, with the remaining stake held by SABMiller, the world's second-largest brewery. SABMiller entered the Chinese market in 1994 and now operates more than 30 breweries across the country through its ventures.
The latest acquisition represents a first for CR Snow in southern China, a regional market that offers the highest gross domestic product per capita, and, coupled with a new brewer being built in Dongguan, will position the group for strong expansion in the market, the company said.
The Dongguan brewer recently started testing its annual capacity of 1.5 million hectolitres in the first phase of its operation.
Qingyuan Brewery can make only 1.2 million hectolitres of beer, but CR Snow plans to increase capacity to 2.8 million hectolitres over the next few years at an upgrade cost of 65 million yuan.
CR Snow produced 15 million hectolitres of beer last year, the largest single volume of branded beer in China, and relegating the Yanjin brand to second place. Once the latest acquisition is completed, Qingyuan's output will be added to the Snow brand.
The deal stands in stark contrast to the buyout of Fujian Sedrin, the largest brewer in Fujian, by the world's biggest beer brewer InBev, done last month at a price of about US$80 per hectolitre.
