Carlsberg to acquire additional 12.25 percent of Chongqing Brewery

Carlsberg is keen to develop Asia as an additional growth engine to reduce its dependency on mature western European markets and the group’s big but unpredictable Russian operations, Baltika.

At the moment, only 7 percent of the group’s profits (EBIT) come from Asia, compared with 52 percent from Russia and 41 percent from western and northern Europe.

Moreover, Carlsberg is keen to catch up with its larger rivals AB-InBev, SABMiller and Heineken, all of which have already established sizeable operations in Asian markets.

“Of all the growth in the global beer market over the next five years, the majority will come from Asia and particularly China,” Carlsberg’s CFO Jorn Jensen was quoted as saying.

Local and foreign brewers are engaged in fierce competition in China to acquire or expand production facilities to meet rising local demand. Demand for beer has grown strongly in China’s main eastern cities but is expected to climb rapidly in central and western provinces in the coming years, as development spreads across the country. Carlsberg’s domestic production of its own brands, launched a decade ago, is focused on western China.

Both AB-InBev and SABMiller’s joint venture were among those that expressed interest in Chongqing Brewery Company (CBC).

The 12.5 percent stake was being sold by the Chinese brewer’s state-owned parent, which will retain a 20 percent stake in the listed company if the deal secures regulatory approval.

CBC operates 15 breweries in China. CBC is market leader in the Chongqing province and operates in the surrounding provinces of Sichuan, Guizhou, Guangxi and Hunan and in the eastern Chinese provinces of Anhui, Zhejiang and Jiangsu. In 2009 CBC’s Chinese volumes were approximately 10 million hl.

CBC also owns a biotech business and the prospect of an eventual sale of this non-core unit, for several hundred million dollars, has bolstered the company’s share price in recent weeks, it was reported.