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The rumors have been out there for a while now. But now it’s a ‘done’ deal. Heineken has acquired a 40% stake in China’s largest brewer… a US$3.1 billion buy-in of the parent company of China Resources Beer who brew the world’s largest beer brand, Snow.
Here’s the deal…
Dutch beer giant Heineken has a 40% stake in China Resources Enterprise, the parent company of China’s largest brewer China Resources Beer (CRE) home to Snow the world’s largest beer brand.
According to the Drinks Business ‘”the agreement will see Heineken’s current operations in China combined with those of China Resources Beer with the latter gaining the license for the Heineken brand in China.”
CR Beer produces is home to world’s largest beer brand, Snow, a low-priced beer that is largely unknown in the west.
China’s beer market is now the second largest ‘premium’ beer market in the world, and having entered into this new alliance, Heineken, is predicted to be “the biggest contributor to premium volume growth in the next five years”.
Heineken entered the Chinese market back in 1983 but they’ve struggled to gain traction in the world’s #1 beer market with less than a 0.5% market share in 2017, according to Euromonitor.
They currently sell Heineken Tiger and Sol in the country, along with local brands Anchor and Hainan Beer and this 3.1 billion deal will allow both companies to benefit from each other’s market networks, large scale facilities, and brand building capabilities.
Heineken will be the exclusive partner for China Resources Enterprise’s international lagers in China.
At the same time CRE will also acquire a sizable chunk of Heineken’s shares worth $5.2 million, while CR Beer will gain Heineken shares worth $538 million and their subsidiary while CR Beer will gain Heineken shares worth $538 million.
Understandably both companies took this opportunity to wax poetic about one another especially Jean-François van Boxmeer Chairman of Heineken’s executive board and CEO …
“We very much look forward to joining forces with CRE and CR Beer, the undisputed market leader in China. We believe that our strong Heineken brand and marketing capabilities, combined with CR Beer’s deep understanding of the local market, its scale and best-in-class distribution network will create a winning combination in the growing premium beer segment in China.
We look forward to working together with CRE’s leadership in our newly formed Strategic Advisory Council, and supporting CR Beer in its ambition to internationalize.”
But the lovefest didn’t stop there Chen Lang, chairman of CRE was equally effusive…
“We are very excited about this partnership and see immense potential in the combined strengths of CR Beer and Heineken. With Heineken’s long heritage and world-class iconic brand portfolio, along with our leading presence and deep understanding of China, we believe we can win together in this new era of the Chinese beer market, in which the premium segment will become increasingly important. In Heineken we have found the perfect partner to achieve our ambitions in China and – as an international partner – to support us in growing our business outside China”.
Heineken has been making a lot of news lately what with falling Q2 revenues and its recent buy into Beavertown Brewery…and their latest “snow job” is sure to keep them in the spotlight in 2018.
