Taiwan: Holder of 80% share in beer market looking for partners to beat competition

Taiwan Tobacco & Liquor, holding about 80 % of the island's $1 billion-a-year beer market, searches for overseas partners while competitors as Heineken and Tsingtao Brewery siphon away its sales and crimp its profit, Bloomberg reported on October 12.

The state-owned company has seen its share of the beer market fall by one- fifth since Taiwan opened to imports in 1987. Its share of the wine and hard liquor markets has declined by more than two-thirds since 2002, when private companies were first allowed to produce alcoholic drinks. "We're willing to talk if any international tobacco, liquor and beer company is interested," the chairman, Ray Dawn, said in a recent interview in Taipei. Foreign investors "can be our long-term strategic partners."

Taiwan Tobacco's sales will presumably drop to 66 billion Taiwan dollars, or $1.99 billion, in 2006, down 5.4 % from this year, although net income is expected to rise 3.9 % to 5.87 billion dollars, according to its 2006 draft budget sent to lawmakers in August.

Sales of beer, which make up 45 % of revenue, are likely to fall by 5.6 % next year, according to the draft. Taiwan Tobacco expects to use 71 % of its brewery capacity and 11 % of its distillery capacity next year, according to its draft budget.

"Foreign companies may be interested in buying stakes in local companies such as Taiwan Tobacco & Liquor, because they have distribution networks and the markets," said Chang Yue-shan, director of the finance department at National Sun Yat-sen University in Kaohsiung. "Cooperation with foreign investors can bring industry know-how for local companies."

The 23 million people in Taiwan drink about 475 million liters, or 125 million gallons, of beer a year, according to figures from Taiwan Tobacco. That figure equals about 21 liters per person in Taiwan, compared with 80 liters per head in Europe.

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