Anheuser invests in Harbin
in China's Harbin Brewery Group - a deal that will increase its
presence in the world's largest beer market, but not without
treading on a few feet.
A-B's investment in Harbin is said to have come as quite a shock to the world's number two brewery, SABMiller, which also has nearly 30 per cent share in Harbin that it bought for HK$675 in June last year. The situation now appears to put the two companies at loggerheads, as they both have similar-sized stakes in the same enterprise.
The world's biggest brewer said that it paid HK$1.08 billion (€115m) for the stake, a high price in comparison to that paid by SABMiller less than a year ago. A-B has bought the stake from an investment company that last month paid HK$947 million for the same stake.
"Harbin fits our strategy of investing in leading companies in growth markets like China with good volume and profit growth potential," said Patrick Stokes, president and chief executive officer of A-B. "We look forward to working closely with Harbin management and believe this cooperation will allow us to better participate in the long-term growth of the industry in China."
A-B has been trying to gain ground on rivals SAB Miller and Interbrew, which have both already got extensive interests in China's brewing sector. A-B currently has a small stake in Tsing Tao, which it has slowly been increasing over the years. Currently the American company has a 10 per cent share in Tsing Tao, but it says it is aiming to raise that stake to 27 per cent over the course of the next few years.
Besides the investment in Tsing Tao A-B's presence in China is relatively limited, which is why the company is keen to make further acquisitions. But some analysts believe the brewer is taking a risk with its most recent investment, possibly putting itself up for a show-down that only one player can win.
Adding to the prickly situation is the fact that Tsing Tao chairman recently said in an interview with FT.com that he stressed the tie up with A-B was intended to be a unique arrangement between the two companies that meant it would not be able to strike up any other strategic partner in China.
Tsing Tao have not made any comment on the A-B's investment in Harbin, however A-B has said that Tsing Tao is "supportive" of its new investment.
Since the early 1990s foreign brewers have experienced a roller coast ride in the China market, with expensive disappointments appearing to be part of the course. However many of the main international players - such as Carlsberg which exited the market only to reappear again in the last few years - have started to increase their presence on the market, chasing slim margins in a very competitive but high volume market.
