China & Singapore: Leading Asian beer producer, Asia Pacific Breweries Ltd. (APB) announced on April 18 that Chief Executive Officer, APB and Chairman, Heineken-APB inked on April 18 the joint venture agreement in Shanghai with Nantong Alcohol Industry Co., Ltd and Marubeni co., Ltd., following Asia Pacific Breweries’ 31 March announcement that its associate company, Heineken-APB (China) Pte Ltd will be acquiring a 40% stake in Jiangsu DaFuHao Breweries Co., Ltd, Mr Koh Poh Tiong,
The total acquisition is valued at US$28,600,000 of which APB’s share is 50% or US$14,300,000; the remaining amount will be contributed by Asia Pacific Investment Pte Ltd, which owns the remaining 50% of Heineken-APB.
On the joint-venture, Mr Koh Poh Tiong, Chief Executive Officer, APB and Chairman, Heineken-APB said, “This partnership is more than just an entry for Heineken-APB into the affluent Jiangsu market. The collaboration will strengthen Heineken-APB’s beer portfolio including Tiger Beer and Heineken, enabling us to offer our consumers greater choices in every segment of Jiangsu’s beer market. As we work with Dafuhao on contract brew opportunities and optimise sales and marketing opportunities for both APB’s brands and Dafuhao’s brands, we hope to tap on our total expertise to extend and strengthen our principal brands in Jiangsu.”
DaFuHao, incorporated in 1996, is one of the most profitable breweries in the Jiangsu Province today. Ranked the top brewery in the province, DaFuHao owns four plants with a total production capacity of 3.5 million hectolitres in Nantong, Tongzhou, Qidong and Yancheng. It brews, markets and distributes major beer brands including “BBOSS”, “Tongzhou” and “Changjiang” which are popular in Nantong. The brewery has a 80% share of the 1.6 million-hectolitre Nantong beer market and 12% share of the Jiangsu beer market.
DaFuHao’s flagship brand, BBOSS and its variants cater to both the premium and standard segments while Tongzhou and Changjiang are positioned in the local standard segment. Partnering with no less than 1200 first tier distributors in the country, DaFuHao’s beer brands are familiar names which are well-distributed at the on-trade and off-trade channels.
Apart from its dominant market share in Nantong, DaFuHao is also growing “BBOSS” in other parts of Jiangsu, in particular Taizhou, Yancheng, Nanjing and cities near Suzhou. The total beer market in the Jiangsu province in 2004 is estimated to be 14.6 million hectolitres, 5% of the China beer market. The Jiangsu county which is located at the Yangtze River where growth potential is tremendous, also has the second largest absolute GDP and is ranked 6th in per capita GDP of all provinces in China.
Heineken-APB, which oversees all Asia Pacific Breweries’ beer brands and spearheads all its strategic activities such as investments, mergers and acquisitions in China, also owns breweries in Shanghai and Hainan. Last year, Heineken-APB joined alliances with Kingway Breweries in Guangdong, another one of China’s largest and wealthiest provincial beer markets. With Heineken-APB’s presence extended to Jiangsu, APB is better placed to engage in the developments of the China beer market from within.
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