China Resources buys 21.37 percent stake in Kingway Brewery from APB/Heineken

Consolidation of the Chinese beer market is gathering pace. China Resources Enterprises, which is in a joint venture with SABMiller and also happens to be China’s major brewer, bought a 21.37 percent stake in Kingway Brewery on 9 March 2011 according to a Hong Kong stock exchange disclosure.

China Resources paid around USD 164.4 million for the stake, according to Chinese media sources.

Only a few days previously, Kingway Brewery, which has seven breweries in China according to its web site, had said that its shareholder Heineken-APB was planning to divest its stake in the Chinese brewer.

Heineken-APB is part of the 50-50 joint venture between Heineken and Singapore’s Fraser & Neave in the Asia-Pacific region.

The reason for the sale is that Heineken-APB has commissioned a new brewery in Guangzhou and wants to focus on the premium segment in China, commented Mr Roland Pirmez, Chief Executive Officer of APB.

The buyer of the stake, China Resources, obviously wants to increase its footprint across China. Currently, China Resources is managing close to 70 breweries in China. Its major brand Snow and other brands are spread over 30 territories. With a sales volume of 83.7 million hl of beer in 2009, China Resources has a market share of about 20 percent, SABMiller said in February 2011.