Asahi considers sale of stake in Tsingtao Brewery

12th October, 2017 by Phoebe French

Japan’s Asahi Group Holdings has announced that is considering the sale of all or part of its 19.99% stake in Tsingtao Brewery, confirming reports circulated earlier this year.

Asahi acquired its stake in Tsingtao in 2009 for around US$666.5 million. According to today’s share prices, the stake is now value at HK$8.5 billion (US1.1 billion, £976 million).

In February this year, dbHK reported that Asahi was working with Morgan Stanley to sell its stakes in Tsingtao. Today marks the official confirmation that the company is looking to sell all or part of its stake.

In a statement entitled ‘Notice of Commencement of Evaluation of Transfer of Stake in Overseas Equity-method Affiliate’, Asahi revealed that the move is part of its “long-term vision” and also its “medium-term management policy”. The company is aiming to both strengthen its position in the domestic market “to be a value accretive industry leader in Japan” and also to develop its existing brands and acquire “new foundations for growth by leveraging existing strengths”.

In December last year, Asahi paid €7.3 billion (US$7.8bn) for SAB Miller’s central and eastern European beer business after AB InBev’s acquisition required the sale of certain assets belonging to SAB Miller. The brands included Czech market leader Pilsner Urquell and Kozel, Poland’s Tyskie and Lecher and Hungary’s Dreier. Asahi now has around a 9% stake in the European beer market, excluding Russia.

Earlier that same year, AB InBev offloaded SABMiller’s other European beer brands, including Grolsch and Peroni, to Asahi for €2.55bn (US$2.76 billion).

In its statement, the company said: “We are engaging in efforts to ‘restructure our business portfolio with a focus on asset efficiency,’ to assess whether each business contributes to sustainable enhancement of corporate value.”

“As a result of our review of our investment in the beer business in China during the course of such process, we decided to commence an evaluation of a potential transfer of all or part of our stake in Tsingtao Brewery”.

Last week, Asahi announced it would be increasing the price of its bottled beers and kegs for the first time in 10 years in 2018, citing a rise in distribution costs and new regulations as the reason for the price hike.

It did not identify a potential buyer or sale price for its stake in Tsingtao.

Tsingtao’s shares finished the day down by 2.3%. It remains the fourth biggest big brand, according to data supplied by Euromonitor International, with volume sales for 2016 of 45.9m hectolitres. This is down on 2015 in which volume sales of 50.1m hectolitres were reported.

Despite shrinking profits and the growth of imported beer, it remains the second biggest domestic beer brand in China, with 15% of China’s beer market share, behind Snow Beer with 22%. Tsingtao Brewery Group Company Limited currently holds a 30.83 % stake in the company.

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