E-Malt.com News article: 2175

China: Scottish and Newcastle (S&N) announced on February 11 that intends to acquire 19.5% of equity in the Chinese Chongqing Brewery Company (CBC) from CBG, who will remain the largest shareholder with 34.5% of equity. Funds injected will be used by CBG to acquire breweries in the Chongqing and Yangtze River regions. These acquired breweries and those unlisted breweries already owned by CBG will be injected into CBC to create a single listed brewing entity.

S&N’s injection of equity will enable CBC to expand its regional leadership in the fast consolidating Chinese market. Emerging markets provide an attractive opportunity for long term growth. S&N has had a ten-year relationship with Chongqing and can contribute skills, experience, and brands. Chongqing is a profitable brewer with a strong regional position.

Meanwhile Chinese beer market estimated at 240 mhl has excellent growth prospects growing at 6-7% per year. Chinese per capita consumption is about 20 litres with strong prospects for long-term growth. Growing consumer prosperity will create the long term requirement for greater brand differentiation amongst domestic brands and some potential for international brands

Chongqing Beer Group, a municipal government company owns unlisted breweries with capacity of 4 mhl, and 54% of the listed company Chongqing Brewery Company, has ten-year relationship with S&N. The brewery is situated in Chongqing in South West China. Chongqing population: city 13m, region 30+m. The region is a favoured development region for central government. The brewery is a strong market leader in the region with 80%+ market share in Chongqing. It has a good level of profitability (EBITDA margin c 20%). Brewery’s leading brands are Chongqing beer and Shancheng beer.


11 February, 2004