China: Carlsberg is involved in 20 breweries primarily in western China
Carlsberg A/S, the largest Danish beer maker, announced on April 3 it has signed a joint venture agreement with Ningxia Nongken Enterprise Group Co. Ltd ("Nongken") to establish a greenfield brewery located in the Ningxia Autonomous Region in western China. Carlsberg will own 70% of the joint venture. The new brewery will have a capacity of up to 1 mio hl. Until the new brewery is in operation by the end of 2006 the beer will be supplied from Nongken's existing brewery. It is also expected that the new brewery will maintain supplies to the neighbouring provinces north and east of Ningxia.
The beer consumption in the region is approx. 1 mio hl equal to an annual per capita consumption of around 18 litres, which is below the national average of approx. 23 litres per year. Nongken will bring into the joint venture a considerable experience in producing and distributing beer in the local market. The local Xixia beer brand will be part of the portfolio of the new joint venture.
With investment in another seven breweries – one under construction - Carlsberg has passed a milestone in its ongoing expansion in China. Now Carlsberg is involved in 20 breweries primarily in western China – joint ventures as well as wholly owned companies. The total yearly beer consumption in the provinces, where Carlsberg is involved in brewing activities, is about 12 mio hl. Together with its partners Carlsberg holds a total market share of close to 63%.
Carlsberg is moreover the only international brewer with significant presence in the western part of China, which geographically constitutes about one third of China and has more than 100 million inhabitants.
In September 2004 Carlsberg acquired initially 34.5% of Wusu Brewery in Xinjiang. In early 2005, Carlsberg and our local partner in Xinjiang, Blue Sword, initiated a major restructuring of the brewing sector in Xinjiang. The overall purpose of this restructuring was to consolidate the breweries in Xinjiang owned by Wusu Brewery (5) and Xinjiang Brewery Group (6).
The legal restructuring is now completed. Consequently Carlsberg now owns 50% of the combined Wusu/Xinjiang Brewing Group (a total of 11 plants), which holds a combined market share of 90%. The other 50% of the combined brewing group is owned by Xinjiang Hops, a company listed on the Shanghai stock exchange.
"Beer consumption in western China is still significantly below the national average; in certain provinces, less then 1/4 of the national average. This combined with the central government's desire to develop the western part of China both financially and in all other areas and to catch up with the rest of China, means that the potential for increase of beer consumption in this region is very significant. This combined with the opportunity Carlsberg has had to buy into leading breweries in all the provinces, where Carlsberg is present, means that we have established a very solid base for growing our business in China considerably," says Jesper B. Madsen, Senior Vice President for Carlsberg in Asia.
Carlsberg is one of the leading brewing groups in the world, with a large portfolio of beer and soft drinks brands. Its flagship brand – Carlsberg – is one of the fastest-growing and best-known beer brands in the world. More than 30,000 people work for Carlsberg at 92 local production sites in 48 countries, and its products are sold in more than 150 markets. In 2005 Carlsberg sold more than 100 million hectolitres of beer, which is about 83 million bottles of beer a day. Find out more at www.carlsberg.com/info.
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