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SAB Aims to Be Biggest Beer Maker
Leading brewer South African Breweries (SAB) said it is likely to invest US$100 million in China in the next three years.

The money will be spent on acquisitions and brand building in the China market, said Andre Parker, managing director of SAB Africa and Asia.

SAB recently announced its 26th and 27th brewery acquisitions in China, consolidating its position as the country's second largest beer maker after East China's Shandong Province-based Tsingtao.

Through its Chinese joint venture, China Resource Beverages Ltd (CRB), SAB acquired a 60 percent interest in the Euro Dongxihu Brewery in Wuhan in Central China's Hubei Province from Danone Asia Pte Ltd and 85 percent shares in the Snow Leopard Brewery in Changchun in Northeast China's Jilin Province.

SAB has already invested more than US$100 million in the 27 acquisitions and claims to be the country's second largest brewer through its 49 percent share of CRB.

The Hong Kong-listed China Resources Enterprises Ltd (CRE) holds the remaining 51 percent of the joint venture, spending a similar amount to date.

CRB now owns a total capacity of 35 million hectolitres.

Parker said that in choosing plants to acquire in China, SAB will value the facts that the plants are located in an area with potential for a good selling price and a good profit, have strong brands that are acceptable to consumers and brewers, and are capable of producing top-quality beers.

He said SAB is also considering bringing its international brand, Pilsner Urquell -- the world's first golden beer, brewed in the Czech Republic -- to China's market.

This brand is well known in Europe and the United States but is priced at the high end of the market -- about twice the cost of Chinese brands.

While many foreign brands that entered China in the mid-1980s are pulling out of the market and selling their assets to local Chinese beer makers such as Tsingtao, Yanjing and Zhujiang, Parker attributed SAB's successful expansion to the right choice of a Chinese partner.

He credited CRE's talented business executives, saying they have a good understanding of the market.

Despite competitors' criticism that SAB's rapid business expansion in China is largely based on its capital strength and that CRB is weak on market integration and management, Parker said SAB is collaborating closely with its Chinese partner on quality management, cost control, human resources placement, marketing and brand building.

He said SAB is committed to the Chinese market, the world's second largest in terms of beer consumption, and expected to become the largest beer maker here within five years, with an annual growth rate of 10 percent.

But he added that the Chinese market is divided into smaller regional markets that require a regional approach to doing business in the country.

(China Daily February 19, 2002)

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