Consolidation in Chinese brewing industry

The brewing scene in the Peoples’ Republic of China will undergo major changes within the next five years. Large local breweries will buy up smaller operations to consolidate their brands. This will also push quality up because local producers of cheap products will be either taken over or eventually forced to shut down. This trend will also have repercussions for the international barley market as imports will rise in line with increasing demand for high-quality malt from large Chinese brewers. There are currently over 800 breweries in China, down from 1200 four years ago. According to Ken Wu, Marketing Manager of Foster’s Brewing Shanghai, a subsidiary of the Foster’s Brewing Group of Australia, this figure will drop to 200 in the next three to five years as consolidation progresses..

No thanks, but ... yes?

Australasian soft drink bottler Coca-Cola Amatil (C-C Amatil) has rejected an initial offer for its operations in Indonesia, South Korea and the Philippines. The Coca-Cola Co. and San Miguel Corp were reported to have offered at least A$ 3 billion. Both bidders are also C-C Amatil’s major shareholders, owning 37 % and 21.5 % respectively. C-CAmatil’s Asian businesses have a book value of A$ 3.9 billion. Analysts believe that a revised offer is likely. The Philippines which accounts for almost 30 % of C-C Amatil’s sales, has continued to undermine the company’s performance and its share price. The 2000 pre-abnormal result of A$ 190 million was hit by a A$ 66.7 million abnormal cost for restructuring the Philippines business.

GM food labelling approved

The Australia New Zealand Food Standards Council has agreed to a labelling regime for genetically modified foods in a Standard which - Requires labelling of food and food ingredients where novel DNA and/or protein is present in the final product; - Requires labelling of food ingredients where the food has altered characteristics. The Standard allows an ingredient to contain up to 1 % of unintended presence of genetically modified product. The revised Standard will take effect 12 months from gazettal. For further information, visit www.anzfa.gov.au

Limping lion

Tasman brewer Lion Nathan plans to restructure its loss-making Chinese operations. In November Lion announced a A$ 120 million write-down which triggered speculation that the brewer would sell its beer interests in the tough Chinese market altogether. Last year Lion Nathan lost A$27.6 million in China. The abnormal charge sent the company’s 13-month profit to 30 September down to a mere A$3.7 million. Lion Nathan, which is moving its balance date to 30 September, reported a slightly improved profit of A$ 124 million on revenues that had risen 12 % to A$ 1.61 billion. In New Zealand and Australia, better pricing and a consumer shift towards higher-margin premium beers had helped to bring up earnings before interest and tax by 4.7 % to A$311 million.

Happoshu to hit the shores

Sapporo Breweries Ltd. has started selling its low-malt beer brand Reisei Karakuchi in the country’s Seven-Eleven shops in six-packs of 350ml cans. A single can retails at the relatively high price of US$1.30. Should the product prove to be a success, Sapporo intends to lower the price on the 350ml can and introduce a 500ml can.

Wuhan Academy for Brewing Technology Training of brewers in China

The dual system of vocational training has been in operation in the Chinese brewing industry for the past 12 years and has become widely accepted. During a visit to the Academy for Brewing Technology (BTA) located in Wuhan, Province of Hubei, China, Brauwelt obtained some interesting information on brewers training and the role played by the BTA as a training centre for the brewing industry and for German suppliers. This portrait gives an insight into the wide range of activities and accomplishments.

In the twelve years since establishment of training cooperation in 1988, the BTA has developed as part of a State School of Light Industry. BTA arose out of a relationship between Hanns-Seidel-Foundation of Germany and the Chinese Ministry of Light Industry.
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The usual suspects

Feldschlösschen-Hürlimann Holding AG, the listed Swiss beverage and real estate group, has not named potential buyers for its SFR1.0 billion beverage division yet although it is known that the Swiss Eichhof Holding AG and Carlsberg are interested. Heineken and SAB have also been named as showing an interest in the troubled group whose net loss increased to SFR5.3 million (US$3.1 million) in the first half of 2000. For the full year the group has forecasted a profit which would fall short of the 1999 net profit of SFR50.2 million.

Wine, rather

With wine becoming the investment of choice among brewers, Lion Nathan decided to follow the general trend. In May the Tasman brewer bought a 13.5% stake in the wine company Montana Group, New Zealand’s biggest wine group, for about A$55 million. Montana, which has a dual listing on the New Zealand and Australian stock exchanges, holds more than 35% of the NZ wine market.
In August, Lion Nathan said it intended to raise the stake by 5% to 25%. The announcement came amid speculation that Lion Nathan only raised its stake to block Foster’s Brewing Group, which had also eyed up Montana. There had been a rumour as early as last year that Foster’s might offer up to A$485 million for Montana..

Easy on the eye

Last year, the top 10 soft drink brands accounted for more than 1200 billboards in Beijing, Shanghai and Guangzhou. Pepsi Cola was top of the league with almost 400 billboards in the three cities, followed by Coca-Cola with 186 and 7-Up with 182 according to Guangdong Kangsai Marketing Services.

Lift plus

Honestly, no pun intended. Coca-Cola Australia introduced Lift Plus, an energy drink, containing vitamin B, guarana and ginseng. The drink is marketed as a natural lift-me-up and sold in a 250ml bullet can and a 355ml resealable glass bottle through convenience stores, licensed premises, petrol stations and food courts, among others.