Tsingtao plans threesome with Suntory and Asahi

Anyone into threesomes? Apparently, naughty Tsingtao is wanting to pull Japan’s Suntory into its bed while Asahi is fearing it will have to relinquish the pillow. That’s the more colourful interpretation of what is currently happening at Tsingtao, China’s number two brewer, in which Asahi has a 20 percent stake.

In early June this year, Suntory announced that it will set up a joint venture with Tsingtao for the production and sale of their brands. The 50:50 joint-venture is geographically limited to Shanghai and the neighbouring Jiangsu province, it was reported.

The two brewers will put factories and sales networks in these areas under one umbrella.

Suntory, which established its presence in China in 1984 and began selling its branded beer in 1996, holds the largest stake in Shanghai’s beer market. As a result of the new partnership with the Chinese brewery, Suntory will also lead the market share in Jiangsu.

Meanwhile, rival Asahi, which bought 20 percent of Tsingtao’s stock in 2009 from AB-InBev, is one of the brewer’s largest shareholders. The company is negotiating with Tsingtao to use its distribution networks across China as an expansion route for Asahi’s products.

Japanese media say that both Asahi’s and Suntory’s own ventures in China have been loss-making in recent years. To both, a tie up with Tsingtao would make sense – individually, yes, but not as unwilling bedfellows.

Because of the Chinese market’s low profitability, the two other major Japanese brewers, Kirin and Sapporo, have in recent years reduced the scope of their businesses.