Tsingtao buys stake in Asahi's Shandong venture
Tsingtao Brewery, the mainland's second-largest beer producer, will pay 214.5 million yuan (HK$244.29 million) for a 39 per cent stake in Asahi Breweries' Shandong venture to strengthen its position in the eastern province.
Tsingtao and Tokyo-based Asahi also have a joint venture in Shenzhen.
Tsingtao signed an agreement on Sunday to purchase the stake in Yantai Beer Asahi, a joint venture between Asahi and state-owned Yantai Beer Group.
Thirty-seven per cent would come from Yantai Beer Group and 2 per cent from the Japanese firm, said a Tsingtao official, who added the purchase would be financed by internal resources.
After the transaction, Asahi will remain the largest shareholder with a 51 per cent stake, while Tsingtao will have 39 per cent. Yantai Beer's stake will fall to 10 per cent.
'The acquisition would help us strengthen our market share in Shandong province, where both Tsingtao and Yantai are based,' said executive director and chief accountant Sun Yuguo.
Set up in 1920, Yantai Beer, which mainly sells medium-priced black beer, has an annual production capacity of 300,000 kilolitres, with an output of 183,000 kilolitres last year.
Tsingtao has an annual capacity of 8 million kilolitres with an output of 5.05 million kilolitres last year.
Citigroup has forecast that beer consumption growth on the mainland will slow to 7 per cent between this year and 2010, compared with 15 per cent and 12 per cent in 2006 and last year and mid-single digit growth during 2001 to 2005.
Citigroup has said geographical coverage by brewers is important to survive, which is why major players have engaged in large mergers and acquisitions in the past few years.
Last year, the top 10 brewers held 64 per cent of the market, compared with 46 per cent in 2003. The top three now claim 41 per cent of the market, compared with 31 per cent five years ago.
