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Heineken acquires 40% stake in China Resources for $3.1 billion

Dutch beer giant Heineken has confirmed rumours reported earlier this year that it’s acquiring a 40% stake in China Resources Enterprise, the parent company of China’s largest brewer, for HK$24.4 billion (US$3.1 billion).

The agreement will see Heineken’s current operations in China combined with those of China Resources Beer with the latter gaining the licence for the Heineken brand in China.

CR Beer produces the world’s largest beer brand, Snow, which in 2016, increased its volume sales by 0.47% compared to the 2015 figure – up from 103.3m hectolitres reported in 2013. It acquired SABMiller’s 49% stake in Snow for US$1.6 billion in 2016.

China’s beer market is now the second largest global ‘premium’ beer market, and according to Heineken, is predicted to be “the biggest contributor to premium volume growth in the next five years”.

The brands hope that they can benefit from each other’s route to market networks, large scale facilities, understand of the Chinese market and brand building capabilities.

Heineken ventured into the Chinese market in 1983 and sells its Heineken, Tiger and Sol in the country, along with local brands Anchor and Hainan Beer. In the past, however, it has struggled to establish a foothold, with less than a 0.5% market share in 2017, according to Euromonitor.

Heineken will be the exclusive partner for CRE’s international lagers in China. CRE will also acquire a 0.9% chunk of Heineken’s shares worth $5.2 million, while CR Beer will gain Heineken shares worth $538 million.

Chairman of Heineken’s executive board and CEO Jean-François van Boxmeer said: “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 internationalise.”

Chen Lang, chairman of CRE, added: “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”.

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