Largest beer producer to buy Chinese brewer
(chinadaily.com.cn)
Updated: 2005-12-09 13:50

For the past two years, the heavyweights of the beer industry have been snapping up assets in China, which recently surpassed the United States to become the largest beer market. With growth in beer sales weakening in the United States and Europe, brewers have been consolidating and seeking acquisitions, particularly in developing countries.

Last year, Interbrew, the giant Belgian beer maker, merged with AmBev, the big Brazilian beer producer, to form InBev. One of the company's biggest target markets has been China, where it has made a string of deals, investing more than $400 million in Chinese breweries before its bid for Fujian Sedrin.

Last year, Anheuser-Busch paid $694 million for Harbin Brewery, based in northeast China. And earlier this year, Anheuser tripled its stake in Tsingtao Beer, the nation's largest brewer, to 27 percent.

But many of the deals have puzzled analysts, who say China's market is highly fragmented, with more than 400 breweries. While consumption is growing steadily, the market is struggling with overcapacity and low prices. A bottle of beer in China often costs as little as 25 cents.

However, China's per capita beer consumption is still relatively low, about 18 liters, compared to about 84 liters in the United States and 75 in Western Europe. The nation's growing wealth and demographics also favor increased beer consumption.

Indeed, if the deal to acquire Fujian Sedrin is approved by the Chinese government, InBev will have major beer holdings in China's five wealthiest coastal provinces, w