Carlsberg plots East Asia rewards
says the country's official news agency, as the major brewers take
up position on their East Asian nest eggs, writes Chris
Mercer.
The Danish brewer is set to embark on a joint venture in China's south western Xingjiang region with local brewer Lanjian at a cost of €37.5 million, said Chinese news agency Xinhua. Carlsberg said it was unable to comment at this time.
If the deal goes ahead, it will be Carlsberg's second move in East Asia within a few weeks, having just signed an agreement with the state-owned Habeco brewery in Vietnam.
The partnership, which includes joint investment to build a new brewery, will make Habeco and Carlsberg the market leaders in North and Central Vietnam.
A host of the world's major brewers, including Carlsberg, Heineken, SABMiller and Anheuser Busch, have begun jostling for position in China and neighbouring East Asian countries over the last year.
Consumption remains fairly low, sitting at only 10 and 13 litres per capita in China and Vietnam respectively compared to an average of 80 litres across developed countries in the West, according to Carlsberg.
But, the Far East, like Russia, has seduced many brewers now starved of growth in the mature markets of Western Europe and the US. China alone holds one sixth of the world's population and economies in the region are generally growing.
"We are just at the beginning, but we're investing for the future," said Carlsberg spokesperson Jens Skaarup, adding that Carlsberg had a difficult job in China because of focus on the western provinces.
"People still only have a small amount of money in western China and I'm not sure that beer is always the first thing that they buy. But it is an up and coming market," he said, pointing out that people were increasingly moving into more affluent urban areas.
China was one of Carlsberg's few consolation prizes in the firm's disappointing first quarter results, which left it €42.8m in the red. The brewer said it drove Asian sales up by around 30 per cent to €53.9m from recent acquisitions and marketing investment.
A more liberal market attitude from the region's governments has also helped to open opportunities to brewers. In Vietnam, Carlsberg's new partner Habeco is due to start a privatisation process in the near future, while Chinese authorities have been willing to open breweries up in exchange for the technological and business expertise of foreign firms.
"We've got a good cooperation with the Chinese authorities, they've opened up windows,"said Skaarup.
China is the world's biggest producer of beer with an output of 24m tonnes per year. Analysts recently cited Russia and China as two of the most important emerging beer markets in the world, even predicting the two nations could make up half of the global beer market by 2010.
