E-Malt.com News article: 3284

Hong Kong: SABMiller Plc, the world’s second-largest brewer, said its Chinese venture bought three unprofitable breweries in China from Lion Nathan Ltd for US$71mil in cash. SABMiller said China Resources Breweries Ltd would assume about US$83mil of debt. The London-based brewer is pursuing acquisitions in China and rolling out its brands there after losing a bid for China’s Harbin Brewery Group to larger rival Anheuser-Busch Cos. in the biggest beer-producing nation, according to Bloomberg’s report from September 16.

“Foreign brewers are going more for market share than profit in China,” said Jason Cheung, an analyst at Nomura International Hong Kong Ltd. “The Chinese market is largest but fragmented, making it hard for brewers to make money.”

Overseas brewers face about 500 local rivals in China’s market, which is divided by cultures, tastes and incomes. The 10 biggest brewers controlled 53% of the market last year, compared with 22% in 1996, according to Canadean Ltd, a beverage research company based in Basingstoke, England.

Lion Nathan, Australia’s second-largest brewer, put its Chinese business up for sale in July after seven years of losses in a market that’s tripled in size since 1992.

“Once you’ve decided that there are no prospects for making money in China, that there are no prospects for earning your cost of capital in the medium to long term, you should exit,” chief executive Gordon Cairns said in a telephone interview in Sydney.


Overseas brewers have been battling for market share, betting Chinese consumption averaging 19 litres a person will rise along with incomes in the fastest-growing of the world’s top 10 economies. Lion Nathan has never made a profit in China, where the company’s three Yangtze River Delta brewers had less than 1% of the market.


18 September, 2004