SABMiller associate announces Greenfield Brewery investment in China
26 August 2004
China Resources Breweries Limited (‘CRB’), an associate of SABMiller plc (‘SABMiller’) and a subsidiary of China Resources Enterprise, Limited (‘CRE’), announces that it will invest US$82.2 million (RMB 682m) in the construction of a new brewery in the city of Dongguan, in the south-east Chinese province of Guangdong. The brewery, which will have an ultimate capacity of approximately 3 million hectolitres at a cost of US$27.4 per hectolitre, will be built to international specifications enabling it to produce premium and draught beer. The brewery is expected to be operational in early 2006, construction is expected to commence in November, and on completion will provide employment for some 450 people.
The Guangdong province, which incorporates the Pearl River Delta, is the most prosperous and economically developed in China with a population of over 79 million and the highest regional GDP. The province accounts for approximately 8% of China’s total beer volume and volumes in the province have risen from 6.6 million hectolitres in 1992 to an estimated 19.5 million hectolitres in 2003. Dongguan, together with Guangzhou and Shenzhen, is the largest beer consuming area in the province.
André Parker, SABMiller’s Africa & Asia Managing Director, commented:
“This is CRB’s first greenfield investment in China and will be achieved at a competitive entry cost of US$27 per hectolitre, comparing favourably with recent acquisition multiples. The cities of Dongguan, Shenzhen and Guangzhou will be important future markets for CRB’s Snow brand as well as, potentially, our international premium brands such as Miller Genuine Draft. Additionally, CRE’s extensive supermarket chain will also provide good regional distribution synergies. This investment is a continuation of CRB’s successful 10 year strategy of increasing its national coverage.”
China Resources Breweries is the second largest brewer in China, with a market share of 11% and production capacity of 53 million hectolitres across 33 breweries. In the year to March 2004, CRB reported sales volumes of 25.3 million hectolitres, including 7 million hectolitres of Snow. SABMiller entered the China market in 1994 and is one of few profitable foreign brewers operating in the country.
About SABMiller plc
SABMiller plc is one of the world’s largest brewers, with 2003/04 lager sales volumes in excess of 137 million hectolitres. It has a brewing presence in over 40 countries across four continents and a portfolio of strong brands and leading market shares in many of the countries in which it has brewing operations. Outside the USA, SABMiller plc is one of the largest bottlers of Coca-Cola products in the world.
In the year ended 31 March 2004, the group generated US$1,391million pre-tax profit from a turnover of US$12,645 million. SABMiller plc is listed on the London and Johannesburg stock exchanges.
About China Resources Breweries Limited
China Resources Breweries Limited was established in 1994 and is engaged in the production, sales and marketing of beer and beverages in China. Its shareholders are China Resources Enterprise, Limited and SABMiller plc, the third largest brewing group in the world. China Resources Enterprise, Limited has 51% interests in China Resources Breweries Limited while SABMiller plc holds 49% interests. It operates more than 30 breweries in the Chinese Mainland with total sales volume of 2.53 million kilolitres in 2003.
About China Resources Enterprise, Limited
China Resources Enterprise, Limited is listed on the Hong Kong Stock Exchange and is also traded on SEAQ International of the London Stock Exchange. It is also one of the constituent stocks of the Hang Seng Index in Hong Kong and Hang Seng London Reference Index. The group has a well-diversified portfolio of businesses in both Hong Kong and the Chinese Mainland, with principal activities being retail, beverage, food processing and distribution, textile and petroleum distribution.
This announcement is available on www.sabmiller.com
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