E-Malt.com News article: UK & China: S&N is to spend up to £100m to increase its Chinese beer maker stake

Scottish & Newcastle is to spend up to £100m on increasing its stake in one of China's leading brewers, Telegraph Media published on January 3. The source said that S&N, which includes Foster's and John Smith's among its biggest-selling UK brands, will increase its stake in Chongqing Brewery Company (CBC) to just under 20pc. The deal will be completed in the first half of the year, according to someone familiar with S&N's plans.

The additional investment, which comes after an initial £35m outlay in February 2004, has been prompted by a proposed restructuring at CBC that will see its brewing subsidiaries injected into its Shanghai-listed parent.

S&N's cash injection has been planned since its deal three years ago, although the company has yet to confirm it. The fresh investment will give S&N a slightly bigger shareholding in a substantially larger business.

S&N has already seen its original 19.5pc stake diluted by a previous share issue to its current 17.5pc, underlining the fact that multinationals investing in Chinese companies can become hostages to fortune. S&N, which declined to comment on its plans, has had ties with CBC for well over a decade, and has seen its partner become China's sixth-largest brewer, with a market share of nearly 5pc, according to the beer industry consultancy Seema International.

In common with most Chinese brewers, CBC's principal brands are regionally-focused, sold under the names Chongqing Beer and Shancheng. CBC, which is based in south-west China, also brews McEwan's 1856 under licence from S&N.

The British company trails SAB Miller in China, where the Anglo-South African brewer has invested heavily in a partnership with China Resources Snow Breweries. Elsewhere in Asia, their roles are reversed.

In India, S&N holds a significant stake in a joint venture with the country's market leader in brewing, United Breweries, which owns Kingfisher lager. China and India are two of the world's fastest-growing beer markets, with analysts predicting China will represent more than 13pc of world beer debit by 2011.


04 January, 2007