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CARLSBERG TAKES FURTHER
STEP IN NORTHWESTERN CHINA
Beverage World - Oct 25 8:45 AM
Carlsberg, Denmark's beer giant,
announced it would acquire a 34.5% stake in Xinjiang
Wusu Brewery Co., Ltd., a brewer based in Urumqi,
Xinjiang, as part of its strategy in Northwestern
China.
It has reached an agreement on the deal with Ongo
Investment Pte Ltd., a Singapore-registered company,
and various minority shareholders. Wusu Brewery will
be operated in a joint venture between Carlsberg and
Bluesword Drink and Food Holding Co., Ltd., a mineral
water and low-alcohol drink producer based in Shifang,
Sichuan, Western China.
Carlsberg will offer technology and management support
to the joint venture according to a signed agreement
with Bluesword. The joint venture will reach an annual
beer production and sales volume of more than 1
million tons and a sale of CNY 3 billion in three to
five years.
Ceng Qingrong, board chairman of Bluesword disclosed
that new Wusu Brewery would produce Carlsberg beer
when it met market requirements.
"The acquisition of Wusu Brewery is a further step in
fulfilling Carlsberg's strategy to establish a strong
position in China's western market," said Jesper B.
Madsen, senior vice president for Carlsberg Asia.
Wusu Brewery holds 60% of Xinjiang's beer market. The
market grows around 10% a year.
International beer giants have tapped into the Chinese
market in succession since 2000. It signals a start of
the Chinese beer industry's entry into a low
profit-margin era.
Markets of China's first-tier cities have been grabbed
by three Chinese brewers, such as Tsingtao Beer Stock
Company Limited, Beijing Yanjing Beer Group
Corporation, and China Resources Breweries. So
International beer giants cast their eyes to the
vast-potential western market for merges and
acquisitions.
"The intention of the acquisition is likely to target
five countries in Central Asia," said a Chinese
industry analyst.
The population in the region is close to 60 million,
2.8 times higher than the number in Xinjiang, and its
demand for beer is far more than the latter. The five
provinces are lacking in brewing technology so that
they cannot meet the local strong demand, and they
need to import greater amounts of beer a year.
For instance, Kazakstan, one of the five provinces, is
lacking in beer materials, so it has to import them at
a relatively high price. Its yearly demand for beer is
29 to 30 million barrels, but its yearly output is
only 8.3 to 8.5 million barrels. 70% of its demand
relies on imports.
Also, Bluesword's ambition is consistent with
Carlsberg, and both have formed a strategic alliance
in Xinjiang, which is near Central Asia. Since 2003
Bluesword has started upgrading Wusu Brewery as a
prelude to entering the northwestern market.
Wusu Brewery built a joint venture in Kirghizia, one
of the five countries, in October 2002, as a footing
in Central Asia. It now exports 20% of its annual
output to the region. Its plan is to have a third of
the market in three to five years.
In addition, the market is mainly captured by German
and Japanese brewers.
Carlsberg has started its western strategy in China
since 2002. At the year-end, it took over Kunming
Huashi Brewery Co., Ltd., a brewer in Kunming, Yunan,
Southwestern China, for CNY 85 million. It acquired
Dali Beer Group, a brewer in Dali, Yunan, for USD
26.26 million in June 2003.
In 2004, it bought a 50% stake in Lanzhou Huanghe Beer
Co., Ltd., the largest brewer in Gansu, Northwestern
China.
It set up a 50-50 joint venture, Tibet Lhasa Brewery
Co., Ltd., in Tibet's fast-growing market with Tibet
Galaxy Science and Technology Development Co. Ltd. at
the end of August. The joint venture reaches a total
investment of CNY 760 million.
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