E-Malt.com News article: 2028

China: The Dutch brewing force, Heineken N.V., announced on January 9 that it is finalising arrangements to combine its operations with its associate company, Asia Pacific Breweries (APB) in main land China as of 1 April 2004. Heineken Asia Pacific Breweries China (HAPBC) has been designated as the vehicle for the production and marketing of beer and other strategic activities such as investments, mergers and acquisitions in China. HAPBC will start brewing Heineken beer locally for the Chinese market as per the same date.

HAPBC, shareholder (97%) of the Shanghai Asia Pacific Brewery, intends to acquire the entire registered capital of Hainan Asia Pacific Brewery Co. (HAPCO) from APB at an amount equal to the consolidated audited net tangible asset value of HAPCO as at 31 March 2004. HAPCO operates a brewery on the island of Hainan. HAPBC also intends to acquire the entire registered capital of Heineken Trading (Shanghai) Co. (HTSC) from Heineken at an amount equal to the consolidated audited net tangible asset value of HTSC as at 31 March 2004, based on the HTSC Interim Accounts. As at 30 September 2003, the consolidated unaudited net tangible asset value of HTSC is RMB 57 million (approx. € 5.5 million). The estimated net turnover of HTSC for the year ended 31 December 2003 is RMB 321 million (€ 31 million).

Upon completion of the transactions, APB and its parent company Asia Pacific Investment Pte Ltd (APIPL) will each hold 50% of HAPBC. The indirect effective economic interest in HAPBC will be: Heineken 46.1% and Fraser and Neave 43.9%. HAPBC will benefit through a unified strategy and management approach. It will be able to operate more efficiently and effectively as commercial activities for the Heineken and APB brands in the Chinese market can be combined to realize potential cost synergies in marketing and distribution. Heineken beer will be locally produced to better fulfill the growing demand for Heineken beer in China and improving capacity utilization. Resources can be combined to provide a leaner and more effective management of the various companies.

“Brewing Heineken lager locally will be the platform for the next phase of growth in China," said APB's chief executive officer, Koh Poh Tiong. "Capacity utilization of our Shanghai brewery will increase significantly, while cost savings arising from local production can be invested into building the Heineken brand and volume growth activities in the China market."

Mr Koh said the China beer market was estimated at 235 million hectoliters with a growth potential of 3 % to 5 % in volume over the next 10 years. More beer was now drunk in China than in the United States per capita, and China had become the largest beer market in the world in terms of volume.


13 January, 2004