The world's largest brewer, InBev, says it plans to spend 125 million yuan (US$15.5 million) to buy an extra 1.31 per cent stake in China's fourth-largest brewer, Zhujiang Brewery.

The Belgium-based firm currently holds a 24-per-cent stake in Zhujiang, which cost it only US$19.5 million about three years ago.

"The jump in share value is because of the good operation of Zhujiang Brewery," said Frank Wang, InBev's vice-president for legal and corporate affairs.

After the share increase, Zhujiang will become a Foreign Invested Enterprise (FIE), as the Belgium firm's stake will exceeds 25 per cent. The FIE status will deepen Zhujiang and InBev's strategic partnership as they will then become official joint venture partners.

The new money will likely be used to build more breweries in Guangdong Province.

Global beer giants like SABMiller, Anheuser-Busch and InBev have been putting more money into buying local brewers in China. Anheuser-Busch paid US$694 million for Harbin Brewery, based in Northeast China.

It was reported that InBev outbid Anheuser-Busch and Heineken for Fujian Sedrin Brewery, paying US$750 million. That could have been the largest foreign purchases in China's beer industry.

Wang said InBev was always ready to take over good local brewers in China.

"We are prepared with plenty of money for partners that meet our standards," he said.

InBev is a leading player in the regional consolidation of the Chinese beer market. With a production capacity of over 30 million hectolitres, InBev has a stake in many major provinces and 28 manufactures in Zhejiang, Jiangsu, Hubei, Hunan, Guangdong and Hebei.

"We will carefully look at all opportunities which could further strengthen our position in the Chinese domestic market, through a focused approach that targets key strategic provinces and municipalities," Wang said.

InBev has a strong leadership position in China's wealthiest provinces, and the most number of famous beer brands in the country.

The company believes in developing strong local partnerships and connecting with consumers with a portfolio of local and global brands. This approach has led InBev to become the fastest growing major brewer in China over the last five years.

"We will focus on improving profitability this year and introduce more international brands to China when the market matures," said Wang.

(China Daily January 20, 2006)