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China, Beijing: Chinese largest beer maker, Tsingtao Brewery Co Ltd, 9.91% owned by Anheuser-Bush, has registered sales decline in the third quarter. However the brewery could still maintain up to 10 % earnings growth over the full year due to its solid performance in the first half, analysts revealed. Tsingtao Brewery saw a 3.69 pct fall in net profit in June-Sept on higher costs and expenses. Operating costs rose 1.56 bln yuan during the period from 1.32 bln a year earlier, while unspecified one-time expenses almost doubled to 23.52 million from their year-earlier level of 14.58 million, which led to the earnings fall, AFX posted on October 27.

However, helped by a solid 27.36 % net earnings growth in the first half, Tsingtao reported 10.2 % growth in the first nine months, and industry analysts forecast a full-year growth rate of up to 10 %. “I expect Tsingtao's full-year EPS at 0.26 yuan, up slightly from 0.24 yuan last year,” Qiao Baijun, an analyst with Galaxy Securities said. Chen Lei, an analyst with Tianxiang Securities, concurred, but warned about intensifying competition from foreign brewers, driven by stagnant growth in their home countries. These foreign brewers are increasingly looking for growth in one of the world's fastest growing beer markets.

Annual per capita consumption in China currently stands at only 19 liters, compared with 75 liters in Europe and 84 in the US. At the same time, income levels here are rising rapidly and consumers are acquiring a growing taste for beer. So far, global beer maker InBev has spent more than 600 million US$ in acquiring local beer makers in the country, and other big-name foreign brands such as Anheuser-Busch, SABMiller Plc, Carlsberg International AS and Scottish & Newcastle Plc, are also boosting their presence.

To strengthen its market position and fend off foreign rivals, Tsingtao, along with industry rival Beijing Yanjing Brewery Co Ltd, has been busy buying up smaller regional brewers in the past year. Its most recent acquisition effort occurred in late September, with Tsingtao taking a 90 % interest in Tsingtao Zhangzhou Brewery for 26.35 million yuan. Tsingtao, which has around 50 units within its group, will continue its expansion in the years ahead, but at a much slower pace, as prices for acquisition targets have been pushed up by cash-rich foreign majors, analysts said.


30 October, 2004