South Korea: Retail giant Lotte Group pushes to acquire InBev-owned Oriental Brewery Co.

South Korea's retail giant Lotte Group is seeking to acquire a local brewery in order to diversify its business portfolio, an industry source (Yonhap) said August 23.

"Early this month, Lotte Group set up a task force to pursue the takeover of Oriental Brewery Co., South Korea's second-largest brewery," the source said.

Lotte Chilsung Beverage Co., a beverage maker under Lotte Group, is expected to take the lead in the takeover, he said.

Industry leader Hite Co. had a 60.9 per cent share in the local beer market in the first half, followed by Oriental Brewery Co. with a 39.1 per cent share, according to the Korea Alcohol and Liquor Industry Association.

But Lotte Chilsung said in a regulatory filing later in the day, "The rumour of Lotte seeking to take over Oriental Brewery is groundless."

Earlier, AFX learned July 19 from the Belgian daily '”La Libre Belgique” that the Belgian brewer InBev has denied reports it is to pull out of the South Korean market.

According to the newspaper, the group was seeking to sell its Korean subsidiary Oriental Brewery, where “'sales were in free fall.”

“This is not correct. InBev has no intention of leaving the South Korean market, or selling its subsidiary, because South Korea is a very important market for us,” said a spokesman for the company.

In the newspaper reports, “reliable sources” said the brewer's management had been in contact with Korean distribution group Lotte, in parallel with HSBC making enquiries to another local food group, about a whole or partial sale of InBev's Oriental Brewery.

InBev has been the market challenger in South Korea for 10 years and currently has 41.7 pct market share. However sales have been falling since the end of 2005 due to a change in group strategy.

25 August, 2006