SABMiller expands reach in China

By Dominique Patton

- Last updated on GMT

Related tags Sabmiller Pilsner urquell Beer

SABMiller's China joint venture, China Resources Snow Breweries,
has agreed to buy the remaining shares in a business based in
China's south-western Sichuan province, strengthening its foothold
in an undeveloped region of the country.

CR Snow, in which SABMiller has a 49 per cent stake, will pay US$320 million for the remaining 38 per cent of the Blue Sword holding group that owns 14 breweries in Sichuan province.

The business recorded a net profit of US$12.4 million for the year ended 31 December 2005, up 40 per cent on the previous year.

Mark Chen, managing director of China Resources Enterprise, majority owner of CR Snow, said that Sichuan is already "a major profit centre" for CR Snow and its contribution has been rapidly rising on expanding market share (now around 70 per cent).

"The acquisition will boost our operational efficiency in the western and south-western regions and strengthen our brand portfolio, underscoring our confidence for stronger returns in the coming years."

In a statement today, SABMiller, the world's number two brewer with brands including Pilsner Urquell and Miller Genuine Draft, said that it plans to capitalize on growing demand in the region with capacity expansion of an additional 1.6 million hectolitres to be completed in mid-2007, adding to current 14 million hectolitres.

It already has a significant presence in the more affluent east and in October announced that China Resources Snow had become the country's largest brewer by sales volume, with a 15 per cent market share that beats domestic rival Tsingtao.

Last month SABMiller said it will buy a further two breweries in northern China for a combined US$22.4 million.

Completion of the Sichuan transaction is expected to take place in early 2007, following satisfaction of pre-closing conditions.

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