San Miguel Corp., which makes nine out of 10 bottles of beer sold in the Philippines, is in talks to buy the Chinese breweries of Malaysia's Lion Corp., people involved in the transaction said. Eduardo Cojuangco, chairman of San Miguel, wants to reduce its dependence on the Philippines. Lion Corp.'s 11 China breweries had sales of about $104 million in the nine months to March. San Miguel already has four breweries in China, the world's biggest producer of beer by volume.

Anheuser-Busch Cos., SABMiller Plc, and Carlsberg A/S all expanded in China last month, seeking growth as home markets flag. Per capita beer consumption fell 9.1 % in Germany and 2.2 % in the U.S. between 1993 and 2000, according to an October BNP Paribas SA report. Chinese consumers drank 61 % more.

Rising Chinese consumption led the country to topple the U.S. as the world's biggest beer market last year, according to Fusion's Read. Still, foreign beermakers have found it difficult to turn a profit.

Lion Nathan Ltd., Australia's second-largest brewer, said in May that losses in China narrowed to A$7.5 million ($5 million) in the first six months to March from A$12.2 million a year ago. “Our full-year loss for China should be around this level,'' said Warwick Bryan, the company's spokesman.

The world's No. 1 brewer by volume, St. Louis-based Anheuser- Busch, last month increased its stake in Tsingtao Brewery Co. to 9.9 % from 4.5 %. The U.S. maker of Budweiser plans to increase its stake in China's biggest brewer to 27 %.
Its closest rival, SABMiller, maker of Lowenbrau, Miller and other brands, last month paid $86.6 million for 29.6 % of Harbin Brewery Co., China's oldest brewer, founded by the Russians in 1898.

In April, Belgium's Interbrew, the No. 4 brewer, which makes Stella Artois and Becks, paid $35 million for 70 % of the brewing operations of K.K. Group, adding to a $20 million November purchase of 24 % of Zhujiang Brewery Co.
Sixth-ranked Carlsberg, which has been brewing beer in China since 1991, last month paid an undisclosed sum for Dali Beer (Group), the largest brewer in southwestern Yunnan province. The purchase followed its January takeover of Kunming Huashi Brewery, also in Yunnan province.

The purchase of Lion's breweries would be San Miguel's biggest acquisition overseas since Kirin Brewery Co., Japan's largest brewer, bought a 15 % stake in the Philippine company in 2001 for $537 million.

Though San Miguel's China operations made up about 5 percent of its $2.5 billion sales last year, analysts said they remain a drag on profit.
San Miguel, has breweries in Vietnam, Australia and Indonesia. Cojuangco said in May that the company plans to expand its overseas operations and invest for the first time in countries such as Malaysia, Taiwan and Thailand.

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