Home
Menu
Top industry news
Brewery news
Malt news
Barley news
Hops news
More news
All news
Search news archive
Publish your news
News calendar
News by countries


#
E-Malt.com News article: 2661

Hong Kong: SABMiller Plc, the world's second biggest brewer, is thirsty for more acquisition opportunities in China but targets are getting fewer and more expensive, a senior executive said on May 17. SABMiller, which has announced a takeover bid for Harbin Brewery Group Ltd and aims to grab a 20 % share in the world's biggest beer market, is now focusing on the richest eastern cities, under Reuters report.

It also seeks to develop a national Chinese brand and introduce new global brands, including Miller Genuine Draft, Pilsner Urquell and Peroni in the next two years. "Good targets are becoming fewer as the industry consolidates and the interest in the good targets is becoming greater as you probably know and the prices are being driven up," said Andre Parker, SABMiller's managing director for Africa and Asia told Reuters in an interview by telephone from Johannesburg.

The London and South African-based brewer has a 10 percent share in China via its 49 percent-owned venture, China Resources Breweries (CRB), the second biggest beer maker in the country.

SABMiller also holds 29.4 % stake in China's fourth-largest beer maker Harbin Brewery and made its US$553-million hostile offer in early May after larger rival Anheuser-Busch said it was buying a 29 % stake in the Chinese brewer. Including the 29.4 % stake in Harbin, SABMiller has a market share of over 14 % in China.

Anheuser-Busch has yet to secure its purchase given that the seller, an undisclosed group of investors, is still awaiting regulatory approval to buy the 29 percent stake in Harbin Brewery from Harbin's city government. It is unclear whether Anheuser-Busch, maker of Budweiser beer, will make a counter-bid, though the Chinese firm has said it favored the U.S. giant as a long-term partner.

SABMiller's offer price for Harbin is at HK$4.30 per share which translates to US$48 per hectoliter. The offer price is higher than SABMiller's internal benchmark of US$25-35/hectoliter for sales volume, the firm set to evaluate acquisitions in China. Parker said there are other factors such as branding that one needs to take into account when entering a market such as China, without referring to SABMiller's offer for Harbin. Parker said SABMiller wants to become the number one or number two brewery in China and secure a market share of between 15 percent and 20 percent with a focus on profitability.

SABMiller has been in China's second and third-tier cities such as Shenyang and Dalian since 1994. The firm is now seeking to expand its reach with selective acquisitions in first-tier cities. "We have a strong regional footprint in second tier cities but we are not that strong in first-tier cities, that's a shortcoming in our strategy," Parker said.

China's highly-fragmented beer market will continue to consolidate and five to six beer groups are expected to emerge as dominant players in five years time, Parker said. One or two would become national players while some are regional players, he added.

CRB is building its flagship Snow into a national brand, which will benefit from advertisements on national televisions and its sponsorship of sports events. Also there are indications that consumers prefer national brands over regional ones, he said.

Meanwhile, Frank Ning, chairman of China Resources Enterprise, the other shareholder in CRB, said in a statement the combined strength of CRE and SABMiller would ensure CRB becomes the market leader in China in the foreseeable future.

China is the world's largest beer market by volume, which expects to grow up to 10 percent in the next few years. The potential is huge in a nation of near 1.3 billion people where beer consumption is roughly 18 liters per person per year, well below the 50 liters seen in Japan and the 84 liters in the United States. It is also brutally competitive and a bottle can cost as little as 18 U.S. cents. The industry has seen a flood of investment from foreign giants in recent years, including Heineken, Carlsberg Breweries and Scottish & Newcastle

International players are eager to buy into local firms to take advantage of existing distribution networks and brands. "We have a real appetite in China and we don't have a limit," Parker said.


19 May, 2004

   
| Mail your friend | Printer friendly |
Copyright © E-Malt s.a., 2001-2008