China. Anheuser snags Henan brewer

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Anheuser-Busch InBev, the world’s largest brewer, has acquired China’s Weixue Beer Co, the second largest brewery in Henan Province, a move analysts said shows AB InBev’s clear-cut strategy for expanding its presence in the world’s largest beer market.
AB InBev inked a deal with Weixue Beer on Monday to acquire Weixue Beer’s intellectual property rights including its two trademarks “Weixue” and “Jigongshan,” assets and business, AB InBev said in a statement e-mailed to the Global Times Wednesday.
Acquired Weixue breweries include Xinyang brewery, Zhengzhou brewery and Gushi Brewery. The transaction is subject to the customary approvals under Chinese law, the statement said.
Though the financial terms of the acquisition were not disclosed yet, sources familiar with the matter said AB InBev was expected to pay at least 530 million yuan ($80.77 million) in the deal.
AB InBev was created in 2008 when Belgium’s InBev bought US brewer AB InBev. It now runs 33 breweries in China across 13 provinces and manages over 25 beer brands including Budweiser, Harbin and Sedrin.
Established in 1982, Weixue Beer made its name in Henan Province for its two brands “Weixue” and “Jigongshan,” and reported sales of 150,000 tons last year.
The brewer accounted for 10 percent of the market share in Henan Province, second only to Jinxing Beer Co which makes up 30 percent of the market in the province, data from SOCIET Insight & Decision consulting company showed.
The deal comes on the heels of AB InBev’s announcement in November that it planned to invest 2.7 billion yuan($ 412 million) to build a brewery in Xinxiang, Henan Province. “This deal is part of our plan to strengthen our presence in Henan Province … while increasing our market share in the north,” the AB InBev’s statement said.
Meanwhile, Kirin Holdings Co said Monday it has agreed to sell its entire 25 percent stake in China’s Dalian Daxue Brewery Co to AB InBev.
Ma Fei, a market analyst at the Henan-based Nine Degrees Marketing Research Agency, told the Global Times that the 530 million yuan($80 million) deal showed AB InBev’s strategic deployment in one of China’s largest beer markets.
“Weixue is a well-established local brand. It’s unlikely for the AB InBev to give up the Weixue brand, and instead, it will use Weixue to compete with other local brands in the low-end market; the Harbin brand to boost its presence in the middle-end market and Budweiser to consolidate its control of the high-end market,” he said. “China’s brewery market will be increasingly dominated by monopolistic giants in the future,” he added