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Snow Beer Acquires Henan’s Second Largest Beer Corporation Aoke Beer, Dominating the Central Plains with Series of Mergers (Translation)

13 January 2011

 

On January 11th, 2011, China Resources Snow Breweries (China) Limited (CR Snow) officially announced that it has completed the buyout of Henan Aoke Beer Industry Co., Ltd (Aoke).

The acquisition is the second of CR Snow's heavy punches to Henan's market, which comes a month after November 26th, when the foundations are laid to CR Snow's 200,000 kiloliters beer production project in Zhumadian, Henan.

Those in the field believe that as a leader of the Chinese beer industry, CR Snow's acquisition warrants attention in the recently active Henan market, as it is the first time a national beer brand has formally entered the Zhengzhou area in a large scale move, which is the centre of Henan's beer industry. It also signifies the unveiling of CR Snow's dominance in the Central Plains.

CR Snow expressed that it has acquired Aoke's three factories in Zhengzhou, Luohe, and Anyang, as well as the brewing assets. The annual production of the three factories total 290,000 kiloliters.More remarkably, upon the completion of the buyout, CR Snow will invest an additional RMB 400 million for large scale technological upgrades and relocation and expansion. Phase one expansions will bring a capacity of 400,000 kiloliters, significantly higher than the scale of the Aoke factory acquired. Along with the foundations laid in Zhumadian, the acquisition will increase the number of CR Snow's production headquarters in Henan to four, with a capacity of 600,000 kiloliters.

Aoke Beer is a widely recognized brand in Henan, excelling in terms of reputation, quality and sales teams when compared to the numerous beer corporations in Henan. Aoke's core factory in Zhengzhou lies in the city cluster of the Central Plains, which is the economical heart of Henan, which bears significant strategic importance.

Industry figures have shown that since it first entered the Henan market, CR Snow has maintained three years of steady and low profile market operation. With sales in Yudong reaching 200,000 kiloliters, it has continued to assume leadership in the local market, surpassing other top-end national brands in terms of sales in Henan, and accumulating operational experience in the diverse local market.

It is exactly with this accurate insight in the Henan market that CR Snow has swiftly set up a local strategy by way of a series of acquisitions and expansion of factories.

Henan is the most highly populated province in the country. Beer consumption is high, ranking second nationally. For many years, competition among the 40 strong local beer enterprises has been fierce, with chaotic price wars which not only make it difficult for the industry, but fail to satisfy the ever-rising beer consumption demands. The development of the industry has been below the national average.

Upon stepping up its domination in the Central Plains, CR Snow will deploy its efficient brand integration, technological and quality edge, first-class enterprise management and experience in market operations to propel the Yu beer industry out of its current difficulties."CR Snow will proactively take up the pivotal role of reshaping Henan's beer industry through the integration of resources and market expansion, creating an atmosphere of constructive competition and development." general manger Wang Qun of China Resources Snow Breweries (China) Limited stated, "The series of strategic moves in the Henan market are but the first steps of CR Snow's venture into the Central Plains."

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About China Resources Snow Breweries (China) Limited
Established in 1994, China Resources Snow Breweries (China) Limited is a national producer and seller of beer, with headquarters in Beijing. Its shareholders are CR Enterprise and SABMiller, the second largest beer enterprise in the world. CR Snow currently operates about 70 beer factories in China, with the CR Snow brand and over 30 local brands taking up 19.8% of China's business market. In 2009, CR Snow's sales amounted to 8.37 million kiloliters, with an annual growth as high as 15.3%, and corporate sales greatly surpassing other beer enterprises in the country for five years straight. CR Snow's brand sales increased further in 2009 to 18.8%, reaching 7.24 million kiloliters, thereby cementing its status as a leading beer brand in the world.

About CR Snow Beer
In 1964, during a competition held by various beer experts in China, a new product defeated all the long-withstanding brands in the country and garnered first place.Due to the snow-white, rich foam and the lingering floral fragrance of the beer, it was named "Snow Beer".

In 2002, China Resources Snow Breweries (China) Limited focused on shaping CR Snow into a national brand. The light, refreshing taste of Snow Beer and its positive, aggressive, challenging and innovation brand image has gained national acceptance, and become the younger generation's favourite beer.

In September of 2007, the Trademark Office of the State Administration for Industry and Commerce recognized CR Snow as a famous trademark of China.

In 2005, CR Snow became the highest-selling beer brand in the country, with 1.58 kiloliters sold. In 2006, CR Snow became the fastest growing beer brand in China with the greatest worth, and a brand value of RMB 11.185 billion. After grossing the highest sales in 2006 nationally, CR Snow made record sales in 2007, remaining at the top with total sales of 5.1 million kiloliters. In 2007, CR Snow's brand value reached RMB 13.658 billion. In 2008, CR Snow's brand sales grew by 19.1%, with sales of 6.1 million kiloliters, seizing the top spot in "National Single Brand Sales" for the fourth time in a row. It has become the highest-selling beer brand in the world, with a brand value of RMB 15.3 billion. In 2009, CR Snow's brand worth has jumped to RMB 37.726 billion.

About China Resources Enterprise, Limited
China Resources Enterprise, Limited is listed on the The Stock Exchange of Hong Kong, as one of the Hang Seng Index Constituents. Our Enterprise focuses on consumer goods, with business spanning mainland China and Hong Kong, with a emphasis on retail, food and beverages, food processing and distribution.

About SABMiller plc
SABMiller is one of the largest beer companies in the world, listed in both the London and Johannesburg stock exchange, and headquartered in London, England. SABMiller engages in large scale production and sales of beer and other beverages, with business spanning six continents, with over 100 beer factories in 75 countries, 200 beer brands and annual beer sales of 21.0393 million tones. SABMiller's production management enjoys a great reputation internationally, and is seen as a company that excels in operation in newly-developed market. Among the many countries it has ventured into, SABMiller leads in terms of both brand portfolio and market share. SABMiller acquired the Miller Brewing Company of the USA in May of 2002, thereby entering the greatest beer market and profit centre of the world.

About Henan Aoke Group
Henan Aoke Beer Industry Co., Ltd. is a professional beer production enterprise based on Henan Commerce Science Institute Co. Ltd which was started in 1989 and revamped in 1996 into an enterprise with a share-holding system. The company underwent six expansions, with an area of 180,000 squared meters and a gross floor area of 96,800 squared meters. In 2003, with Henan Aoke Beer Industry Co., Ltd. as the mother company, and Luohe Aoke Co., Ltd,and Anyang Aoke Co. Ltd, as the core enterprises, Henan Aoke Group was formed. Its current production capacity is 290,000 kiloliters. Established for 20 years, the company has always insisted on provincial development strategy, and being an area-based brand which has its roots in the Central Plains and benefits the local people. Aoke Beer has maintained a higher market share in the Zhengzhou area. Favored by consumers, the brand reputation and quality of its products has maintained top position in the area.

Development Process:
- 1989, new factory built, 3,000KL;
- 1992, first expansion completed, capacity reached 30, 000KL;
- 1997, second expansion completed, capacity reached 80, 000KL;
- 1999, company production exceeds 100, 000 KL;
- 2003, company built Luohe Aoke Co., Ltd, Aoke Group as formed;
- 2004, company production exceeds 150, 000KL;
- 2007, company production exceeds 200, 000KL;
- 2008, Anyang Aoke Co. Ltd, formed;

- The first beer enterprise to gain ISO9001 recognition in Henan (1997)
- The first beer enterprise to gain HACCP recognition in Henan (2004)
- The first beer enterprise to gain ISO9001, ISO14000, ISO22000 three-in-one management system recognition in Henan (2007)

This SABMiller subsidiary news release has been translated from its local market language to English language for publication on www.sabmiller.com. We have attempted to provide an accurate translation of the original material but due to the difficulties of translation slight differences may exist.

Note, the news release was first published in its local market on [11/01/2011].

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