Anheuser-Busch forms alliance with Tsingtao

The world's largest brewer, Anheuser-Busch, yesterday said it had formed a strategic alliance with China's Tsingtao Brewery which would increase its stake in the mainland's largest brewer.

The United States brewer did not provide details of the alliance, such as by how much it planned to increase its stake.

Anheuser-Busch, which makes Budweiser beer, bought 45 million Tsingtao shares when the Qingdao-based brewer became the first H share to list in Hong Kong in 1993.

At the time, Anheuser-Busch's 45 million shares was equal to a 5 per cent stake in Tsingtao. But the stake was diluted to 4.5 per cent when Tsingtao listed on Shanghai's A-share market last year.

Tsingtao has been looking for a strategic alliance for a long time, according to analysts covering the H share.

'Since China entered the WTO, [Tsingtao] has been expecting foreigners will step up investment into China so that may engender new rounds of strategic alliances between local breweries and the foreigners,' said HSBC Securities' Geoffrey Cheng.

Tsingtao chairman Li Guirong said: 'The strategic alliance between Tsingtao and Anheuser-Busch will join the strengths of two brewing giants and realise the benefits of sharing both sides' resources in the areas of management, technology and capital, thereby improving the management effectiveness, profitability and core competitiveness of Tsingtao.'

Mr Li said Tsingtao could learn from Anheuser-Busch's extensive marketing experience in the US.

At the same time, Tsingtao's production bases and sales network in China would enable Anheuser-Busch to tap into the mainland's 220 million hectolitre beer market - the second-largest in the world, after the United States.