China Resources Snow Breweries, an associate of London and South African-listed SABMiller and a subsidiary of Hong Kong-listed China Resources Enterprise, has entered into an agreement with the Fuyang City government to acquire the assets of the Fuyang City Snowland Brewery Company in Anhui province for a cash consideration of $15-million.
The announcement follows the acquisition in June 2004 of a 90% interest in the Shucheng and Liuan breweries in central Anhui, which produce the Longjin brand.
Unveiling the agreement on Monday, SABMiller said in a statement that the Snowland Brewery has a total annual production capacity of 1,4-million hectolitres and achieved sales volumes of approximately 1,1-million hectolitres in the calendar year 2004. It is the largest brewery in the north-western region of Anhui and its brands include Snowland and Johnson.
The acquisition takes the number of breweries owned and operated by CR Snow to 38 covering the North Eastern, South Western, Central and Eastern regions of the Chinese mainland.
Following completion of the acquisition, CR Snow will make a further investment to expand the production capacity of the Snowland Brewery to 2-million hectolitres.
The total annual production capacity for CR Snow will consequently increase to over 57-million hectolitres (excluding a new brewery plant to be built in Dongguan, Guangdong).
André Parker, manager director of SABMiller’s Africa & Asia division, said: “This acquisition gives us access to the north-western portion of Anhui province and builds on our dominant market share in Hefei and Liuan. It also further develops our significant market presence across the Central region where we have already established a strong foothold in Wuhan.”
Song Lin, chairperson of China Resources Enterprise Limited, said: “We have enjoyed substantial cost and market synergies following the acquisition of the Longjin breweries. By consolidating breweries in proximate areas and integrating our sales and marketing efforts, this will enhance our revenue and operating margins and help Snow further penetrate the market.”
Anhui Province has a population of 59-million people and is in the Eastern region of China.
China Resources Snow Breweries Limited was established in 1994 and its shareholders are China Resources Enterprise (with a 51% stake) and SABMiller (49%). It operates more than 30 breweries on the Chinese mainland with a total sales volume of about 3,1-million kilolitres in 2004. – I-Net Bridge