CR Snow buys four more breweries
China Resources Snow Breweries Limited ("CR Snow"), SABMiller’s joint venture in China with China Resources Enterprise, has announced that it has agreed to acquire four breweries in separate transactions.
Two breweries are in Liaoning province, one brewery is in Anhui and one is in Hunan province. The total investment cost for the four acquisitions, announced in August, is USD 79 million, which includes a cash consideration of USD 57.0 million.
SABMiller reports that CR Snow has agreed to acquire an 80 percent equity interest in Liaoning Yalujiang Brewery Company Limited ("Yalujiang Brewery") and the brewing assets of Huludao Juhua Brewery Company Limited ("Juhua Brewery") through a joint venture in which it will own an 85 percent equity interest. It is also acquiring the brewing assets of Anhui Wanpi Brewery Company Limited ("Wanpi Brewery") and a 100 percent equity interest in Hunan Xinghua Brewery Company Limited ("Xinghua Brewery").
All four breweries will receive investment in their facilities to bring them up to CR Snow’s production standards.
Liaoning province is located in northeastern China with a population of about 42 million inhabitants. At present, CR Snow has eight breweries in Liaoning province and is the leading brewer there. It has total production capacity of over 11 million hl but the existing plants are running close to full capacity. The addition of Yalujiang Brewery at Dandong in southeastern Liaoning and Juhua Brewery in western Liaoning will provide immediate additional production capacity of 2.7 million hl. The breweries will also enhance distribution efficiency, extending CR Snow’s reach over this extensive province, says SABMiller.
Located in the northeastern county, Wuhe in Anhui province, Wanpi Brewery will boost CR Snow’s production capacity there to approximately 14 million hl. It will also generate synergies with CR Snow’s existing breweries at Bengbu and Chuzhou, cementing a strong network in the northern region of Anhui.
Currently, CR Snow is the largest brewer in the province with seven breweries.
Xinghua Brewery is situated at Yueyang in the northeastern region of Hunan province and alongside the famous Dongting Lake. At present, CR Snow does not have any plant in Hunan province though a small quantity of Snow was sold locally. The current annual production capacity of the brewery is 1.2 million hl and it has the dominant market share in Yueyang.
André Parker, Managing Director of SABMiller Africa & Asia, in one of his last public statements said: "The acquisitions reflect our commitment to accelerate the national presence of Snow. Upon conclusion, they will add a total of about 5.0 million hl to CR Snow’s current production capacity of close to 90 million hl. The average attributable investment cost of around USD 18 per hl, is very reasonable, reflecting our ability to expand profitably at low cost."
China Resources Enterprise has a 51 percent interest in China Resources Snow Breweries while SABMiller Asia holds the remaining 49 percent interest. It operates more than 50 breweries in the Chinese Mainland with a total beer sales volume of about 53 million hl in 2006. SABMiller said it became the biggest Chinese brewer by sales last year.
China’s domestic beer production in 2006 was 288 million hl.
 | Something for the evening - a man cycles through the streets of Beijing on his way home from work with three bottles of Snow beer in his basket. Snow is the largest beer brand in China and a product of SABMiller’s Chinese joint venture, CR Snow Ltd. |
