Mainland beer maker China Resources Snow Breweries (CR Snow) has claimed a deal-making coup by buying an 85 per cent stake in Quanzhou Qingyuan Brewery for just US$8.9 million.
The price for control of the small Fujian-based brewer translated into an entry cost - including upgrades - of between US$8 and US$10 per hectolitre of beer, against start-up costs for a new mainland production line that could range from US$20 to US$30 per hectolitre, said Francis Kwong, executive director of China Resources Enterprises (CRE).
'The investment and upgrade is still lower than the cost of building a new plant,' Mr Kwong said.
CR Snow is a joint venture 51 per cent held by CRE, with the remaining stake held by SABMiller, the world's second-largest brewery. SABMiller entered the Chinese market in 1994 and now operates more than 30 breweries across the country through its ventures.
The latest acquisition represents a first for CR Snow in southern China, a regional market that offers the highest gross domestic product per capita, and, coupled with a new brewer being built in Dongguan, will position the group for strong expansion in the market, the company said.
The Dongguan brewer recently started testing its annual capacity of 1.5 million hectolitres in the first phase of its operation.
