Category Archives: Carlsberg China

Carlsberg Offers to Raise Stake in Chongqing Brewery

Source: Bloomberg News By Clementine Fletcher

Carlsberg A/S (CARLA), the world’s fourth- biggest brewer, will offer to buy as much as 2.9 billion yuan ($466 million) of shares in Chongqing Brewery Co. (600132) as it seeks to tighten its grip on the Chinese beermaker.

Carlsberg, which already owns a 29.7 percent stake in the Chongqing municipality-based brewer, will offer 20 yuan a share for a further 30 percent stake in the maker of Shancheng beer, it said yesterday in a statement. The deal will add to earnings per share in the first year after completion.

“Strategically, we believe the deal makes a lot of sense,” Trevor Stirling, an an analyst at Sanford C. Bernstein in London, wrote in a note to clients dated yesterday. “Asia is key to Carlsberg’s long-term growth story; in particular, China is key to Carlsberg’s footprint in Asia, especially western China, including Chongqing.”

Carlsberg, which gets about 14 percent of its sales from Asia, according to data compiled by Bloomberg, is seeking to expand its operations outside the slow-growth markets of northern and western Europe. The brewer said on Feb. 1 that it’s starting a new joint venture in Myanmar, after announcing a tie- up with Thailand’s Singha Corp. on Sept. 28. Carlsberg is the biggest brewer in Russia.

The Chongqing price is 15.7 times estimated earnings before interest, tax, amortization and depreciation, based on expected profits the first year after completion, Carlsberg said. The deal will be financed through existing facilities and may take as much as 12 months to complete.

Stockholder Sells

Chongqing Beer Group Co., which owns 20 percent of Chongqing Brewery, has committed to tender all its shares at the proposed price. If the bid is oversubscribed, Carlsberg will buy any remaining shares held by Chongqing Beer Group.

“We believe that through closer cooperation with Carlsberg, the performance of this large-scale beer business will be significantly enhanced,” Joergen Buhl Rasmussen, Copenhagen-based Carlsberg’s chief executive officer, said in the statement. “Our Asian business is very important for our long-term growth strategy.”

Carlsberg’s shares rose 1.1 percent to close at 594.50 kroner in Copenhagen yesterday, giving it a market value of 91.7 billion kroner ($16 billion). Chongqing’s shares, halted since Feb. 25 pending this announcement, will resume trading today, according to a statement issued via the Shanghai stock exchange yesterday.

Chongqing is strong in western China, including Chongqing municipality, and on the east coast, Ian Shackleton, an analyst at Nomura in London, wrote in a note dated yesterday.

“Although Carlsberg will need further deals to become truly national like market leader China Snow, majority control of Chongqing is a useful building block towards this goal,” Shackleton said.

Carlsberg Returns to Thailand After Heineken’s APB Deal

Source: Bloomberg News By Clementine Fletcher

Carlsberg A/S (CARLA), the world’s fourth- biggest brewer, is returning to Thailand after a seven-year hiatus, following Heineken NV’s successful bid to expand in Southeast Asia.
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Carlsberg Interim results 6 months ended 30 June 2012- Asia Highlights

Source: Carlsberg

The Wall Street Journal notes that “Carlsberg has been increasing its presence in Asia to capitalize on growing demand for Western beer brands. In the second quarter it made 12% of its revenue there, compared with 9.0% a year earlier. In June, the brewer struck a deal to build China’s largest brewery over a 10-year period, and Chief Executive Joergen Boulle Rasmussen Wednesday said the company is prowling the region for possible acquisition targets.”

Changes Brew in Asian Beer Sector

Source: Wall Street Journal By Kathy Chu and Mike Esterl

HONG KONG—The burgeoning beer industry in Asia is likely to undergo significant changes this week, when a decision is expected to be made regarding Heineken NV’s US$4.1 billion bid for one of the region’s prized assets.
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Carlsberg China Backgrounder

Carlsberg beer has been sold in China for over 130 years. In 1876, Carlsberg was first exported to China. The Carlsberg Brewery in Hong Kong, established in 1981, became the base for Carlsberg’s expansion into mainland China.

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Carlsberg Group signs agreement on project in Yunnan,China

Source: Xinhua

COPENHAGEN, June 15 (Xinhua) — TDanish brewing company Carlsberg Group on Friday entered into an agreement with Dali prefecture of China’s southwestern province of Yunnan on capacity expansion.

Under the Strategic Agreement of Beer Production Capacity Increment, which was signed by Carlsberg Global CEO Joergen Buhl Rasmussen and Dali prefecture governor He Jinping, the brewing capacity at Dali will expanded from the present 300,000 tons to 1 million tons by 2025.

With an estimated total investment of 5 billion Chinese yuan, the plan covers brewery construction, brand building, training and organization development as well as supplier network enhancement, according to a press release issued by the Carlsberg Group.

Carlsberg, which owns 41 breweries in China, pledged to build the state-of-the-art breweries at Dali Brewery and Kunming Huashi Brewry by introducing global advanced hardware and international standard.

Carlsberg will continue the efforts of growing with local partners through enhancement of the production efficiency, less consumption of water, electricity, coal as well as less carbon dioxide emission, said the press release.

“Carlsberg believes in growing together with local partners. We are proud that the global advanced breweries will be built in Yunnan through our joint-efforts. Capacity optimization in the region will not only support the continuous growth of Carlsberg in China, also will inject strong momentum for the growth of Carlsberg Asia and Carlsberg Group,” said Global CEO Joergen Buhl Rasmussen.

Carlsberg to tap China growth with giant brewery

Source: Reuters

COPENHAGEN, June 13 – Carlsberg is to build a giant brewery in China to tap growth in the world’s largest beer market, as the Danish group looks to expand outside sluggish European markets.

The world’s fourth-biggest brewer will sign the deal on Friday to coincide with the visit to Denmark of Chinese President Hu Jintao, and spend US$670 million (RM2.13 billion) on the project in the southwest province of Yunnan.

China, which overtook the United States as the world’s biggest beer market in 2003 and was nearly twice the size by 2010, is expected to grow 5 per cent annually in coming years, twice the growth of the global market in 2011.

Copenhagen-based Carlsberg is looking to Asia, especially China, India and Vietnam, to offset stalled growth in its former powerhouse in Russia which brought in big tax rises. It now earns around 11 per cent of group profit from Asia.

While Carlsberg is the biggest beermaker in western China where it runs 41 breweries either fully or in partnerships, it lags other foreign and domestic brewing heavyweights elsewhere.

China’s four biggest brewers – China Resources Snow (CRS), Tsingtao, Anheuser-Busch InBev and Beijing Yanjing Brewery – have nearly 60 per cent of the market and are all looking for local partners to strengthen their positions.

CRS – the largest brewer and a joint venture between China Resources Enterprise and London-listed SABMiller – makes Snow, the world’s biggest beer brand.

The four big brewers are all bidding to buy most of the operations being sold by Chinese peer Kingway Brewery Holdings, worth around US$700 million.

Carlsberg’s new brewery will start in 2014 and produce local brands as well Carlsberg and Tuborg to become the group’s second-biggest site with an annual capacity of 10 million hectolitres, behind its Russian Baltika brewery at 12 million.

“The brewery will be gradually built over a period of time to suit China’s growing demand for beer in the future,” a Carlsberg spokesman said. Carlsberg’s Asian beer volumes grew 14 per cent in the first quarter.

Premium Beers Reach Dizzying Heights’

Source: By Li Fangfang (China Daily)

As bottles of premier beer continue to fly off the shelves in China, from family eateries to trendy night spots, industry insiders say it’s happy hour all year round for brewers.

The country is already the largest producer and consumer of beer. Last year it had an output of about 48.99 million kiloliters, a 9.3 percent increase on 2010 and the eighth consecutive year of growth.

Yet, more importantly, the Chinese masses are increasingly filling their glasses with pricey premium brands, including Carlsberg, Budweiser, Bud Light, Heineken and Skol.

The sector may have made up just 10 percent of overall sales in 2011 (a rise of 20 percent on the previous year), but it contributed almost 50 percent of total profit.

Euromonitor, the British-based research firm, predicts the value of China’s beer industry will reach 457.9 billion yuan ($72.68 billion) by 2014, compared with 305.3 billion yuan in 2009.

“China consumes around 43.8 million kiloliters of beer every year,” roughly one-fourth of the world’s total, according to Stephen Maher, chief executive officer of Carlsberg China.

However, the market has some unique traits, he explained: “Research shows Chinese tend to drink beer more often at restaurants, bars and other entertainment venues, and they like to consume large volumes over a short period of time.

“It (the market) is a challenge and an opportunity, as we have to be constantly on our toes and come up with new brands that can connect with the aspirations of consumers,” he said.

Carlsberg, a Danish brewer, has gained lots of local insight during its time in the market, such as the fact that people on the Chinese mainland prefer less bitter flavors, which is different from those in Hong Kong or Malaysia.

“We launched Carlsberg Chill and Carlsberg Light exclusively for customers in China,” Maher said. “These beers are ideal for Chinese drinkers, unlike our flagship ‘green label’ brand, which is a classical European beer with a higher bitterness level.

“Chill is positioned for those seeking entertainment, and Light is for enjoyable moments. Both have well complemented our strategy of creating tailor-made beer products for Chinese consumers,” he said, adding: “Connecting with consumers is core to Carlsberg’s success.”

Carlsberg has also benefited a great deal from its partnership with Chinese brands, including Wusu, Dali, Shancheng and Xixia.

The company owns more than 30 breweries in 11 provinces and autonomous regions, and in particular has been gaining a strong position in western regions of China since the early 2000s.

“Local brands and partners have helped establish a firm base for Carlsberg and provided better consumer insight,” Maher said, adding that his company intends to nurture people’s loyalty to products by retaining local brands and flavors.

In addition, Belgium-based brewer Anheuser-Busch InBev launched in November began producing its high-end brand Stella Artois in China, said John Hsu, its president of BU North Business. The company also makes Beck’s, Budweiser, Corona and Harbin in China.

Wang Renrong, vice-president in Asia-Pacific for AB InBev, said he believes the Chinese market will contribute 30 to 50 percent to the growth potential of the world’s beer industry in the next few years.

He also said China has been one of AB InBev’s most important markets, accounting for 12 to 13 percent of its total business. “We hope the figure will be bigger, as we see huge potential here,” Wang added.

Stella Artois retails at 40 yuan for a 330-milliliter bottle in the market, while most beers are priced under 10 yuan.

Fashion trend

Along with a spike in consumption, there has also been a marked change in the customers’ perceptions, Maher said.

With disposable income on the rise, beer has slowly made inroads in the high-end sector, traditionally dominated by wine and spirits.

Drinking premium beer is now fashionable among affluent, middle-income families as well as younger generations, Maher said.

“There is high profitability in the premium beer segment,” he said. “Premium beer will account for 25 percent of China’s annual beer capacity over the next five to 10 years. This is good for us, as we have always been strong in the premium segment.

“As consumers move up, they’re moving into our playground,” he added.

“From the Chinese perspective, what we are trying to do is to say that beer has a role to play in Chinese celebrations.”

Carlsberg has already had more than 20 brands targeting Chinese drinkers, although Maher conceded that companies need to get ahead of the trend if they want to make it big in the Middle Kingdom.

“The market has become more demanding, and the fast-changing landscape means that the one with the ear closest to customer preference clearly walks away with the crown,” he added.

Finding partners

After dominating the premium beer sector in China, foreign brewers are turning their attention to low-end customers through acquisitions.

Beijing Yanjing Brewery Co Ltd, the only Chinese brewery without an overseas partner, has looked on as Western rivals have teamed up with companies in second- and third-tier cities.

Based in the capital, and with 42 branches in 18 cities, Yanjing is already one of top-three beer producers in China, and it aims to be one of the world’s top-six brewers by 2015.

To achieve the goal, the company needs to add 3 million kiloliters to boost its annual output to 8 million kiloliters.

Huang Fusheng, an analyst at China Securities, said that over the next five years the competition in the country’s beer market is expected to become more intense, as the brewers will seize opportunities in mergers and acquisitions.

Carlsberg Looking for Acquisitions to Expand in Asia as Europe Stagnates

Source: Bloomberg News

Carlsberg A/S (CARLB), the world’s fourth- biggest brewer, is seeking acquisition opportunities in Asia, including China, amid slowing growth in Europe.

“We look very actively across Asia,” Chief Executive Officer Joergen Buhl Rasmussen said in an interview in Beijing yesterday. In Europe, “we are assuming a cautious environment, very little growth, probably slight decline,” he said. Beer is “not completely recession proof.”

The beermaker wants to boost investment in China both organically and through acquisitions, Rasmussen said, without disclosing possible targets. The Copenhagen-based company last year increased ownership of its Indian unit, and expanded a partnership with Chongqing Brewery Co. (600132) in western China.

Brewers are looking to emerging economies to drive sales growth as markets in western Europe and the U.S. stagnate, restrained by already-high levels of alcohol consumption, growing competition and tough economic conditions.

Anheuser-Busch InBev NV (ABI), Tsingtao Brewery Co. and China Resources Snow Brewery Co., a joint venture with SABMiller Plc (SAB), may bid for assets of China’s Kingway (124) Brewery Holdings, the Wall Street Journal said last week, citing people familiar with the matter. Rasmussen declined to comment on the report.

Possible Sale

Kingway rose 10 percent to HK$2.94, the highest level since August 2007 in Hong Kong. It has gained 35 percent this year, beating the 13 percent advance of the benchmark Hang Seng Index.

The Hong Kong-based company said today it has started talks with “independent third parties” for the possible sale of its business and assets. The company said on Jan. 20 that it would invite third parties to submit proposals for some of its brewery business and assets.

“People are thinking Carlsberg may come in and may want to pay a premium for it,” Jason Yuan, an analyst at UOB Kay Hian in Shanghai who has a “hold” rating on rival Tsingtao, said by phone today. “They’ve been wanting to sell.”

China’s beer market will grow 6 percent to 7 percent annually over the next two to three years, said Rasmussen, who’s in Beijing to attend the European Union-China summit starting today. Retail beer sales in China, the world’s most populous nation, may have risen to 360 billion yuan ($57 billion) in 2011, according to researcher Euromonitor International.

China Competitors

China Resources Enterprise, the maker of Snow beer with SABMiller, has a 22 percent share of China’s beer market; Tsingtao, part-owned by Asahi Group Holdings Ltd., has 14 percent; and Anheuser-Busch InBev has 12 percent, according to London-based Euromonitor.

Carlsberg, the largest shareholder in Chongqing Brewery with about a 30 percent stake, sells Kronenbourg 1664 and Wusu among other beers in China. It has 1.5 percent of the country’s market, according to Euromonitor.

Carlsberg (CARLB) reduced its annual forecast in August after bad weather and sluggish sales in Russia, where it owns the biggest brewer, along with headwinds from high prices of commodities including malting barley, weighed on profitability. It got almost half its operating profit from eastern Europe in its last fiscal year.

The volume of beer sold in eastern Europe slid 9 percent in the three months ended Sept. 30, the brewer said in November, compared with an 11 percent increase in Asia.

Chongqing Brewery Chairman Under Fire

Source: Wall Street Journal | Photo: CFP

SHANGHAI—Chongqing Brewery Co., which is nearly 30% owned by Denmark’s Carlsberg A/S, said Wednesday one of its major shareholders is requesting that the company’s chairman be dismissed following recent sharp declines in its stock price.

The Chinese brewer has come under fire since it said on Dec. 8 that a hepatitis vaccine it had spent more than a decade developing was found to be ineffective. The company spent 100 million yuan, or about $16 million, developing the drug.

Chongqing Brewery said in a statement that Dacheng Fund Management Co., which owns a more than 10% stake, has called for a shareholder meeting on Feb. 7 to take up its proposal that the brewer’s chairman, Huang Minggui, be removed from the post.

Mr. Huang, 61, became chairman in 2007 and his tenure is scheduled to end in April 2013.

Shares of Chongqing Brewery rose 0.7% to 31.61 yuan Wednesday following the statement, after falling 61% in the previous nine sessions. The decline has exerted pressure on the company’s major shareholders. For example, the market value of Carlsberg’s stake has declined by 7.2 billion yuan since Dec. 8.

“Chongqing Brewery did a bad job disclosing information and it did nothing to cope with the (share price) crisis, which has severely harmed our investors’ interest,” a spokeswoman at Dacheng said. “As the chairman, Huang should take responsibility.”

Dacheng’s holdings in Chongqing Brewery account for about 2% of the total assets the fund manages.

Chongqing Brewery acquired a pharmaceutical company, Chongqing Jiachen Bioengineering Co., in 1998, a year after its initial public offering in Shanghai, as part of a plan to develop a hepatitis B drug. The business was attractive to investors because domestic surveys showed that nearly 10% of China’s 1.3 billion people could suffer from the illness.

“The vaccine story steered the regional brewer far away from its fundamentals, so its shares had traded at an exaggerated premium to its big rivals such as Tsingtao Beer,” said Qiu Yanying, an analyst at TX Investment. “The removal of the chairman might not help in preventing further declines in its stock.”

Carlsberg obtained a 17.46% stake in Chongqing Brewery through its acquisition in 2008 of part of Scottish & Newcastle PLC, and it raised its stake in the Chinese brewer to 29.71% for $349 million at 40.22 yuan each last year.