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SAB plc strengthens position as third largest brewer in the fast growing Chinese market

31 May 2001

South African Breweries plc, one of the world’s leading brewers with operations in 22 countries, today announces that through its Chinese joint venture company, CRE Beverage Ltd (“CREB”), it has acquired three new brewery companies in China. They are China Resources (Dalian Bangchuidao) Brewery Co Ltd, in Dalian city in Liaoning province, China Resources (New Three Star) Brewery Co Ltd in Shangzhi city in Heilongjiang province (both provinces are in North East China), and China Resources (Sichuan Emei) Brewery Co Ltd in Leshan city in Sichuan province, in South West China.

CREB has acquired the brewing assets and brands of the three breweries and injected them into the newly formed joint venture companies. All three acquisitions will be funded through a combination of internally generated cash and local Renminbi debt at favourable rates.

“China is one of the fastest growing beer markets in the world at 7.2% per annum and second only to the USA in terms of beer volumes consumed,” said Graham Mackay, CEO of SAB plc. “These further acquisitions underline our commitment to this region and the huge potential it offers. The beer brands and businesses now in our China portfolio confirm our position as the third-largest brewer in the People’s Republic of China and we plan to continue to evaluate further expansion opportunities in this market.”

The acquisition of 80% of the Bangchuidao brewery adds 1.25 million hectoliters of capacity to CREB’s existing Dalian brewery, which has been operating at full capacity for the past two years. The additional brands enhance CREB’s strong position in the city. Further investment will be made in terms of refurbishment and expansion at a total cost of investment of US$ 42 million of which US$36.2 million represents the initial acquisition cost.

The acquisition of 70% of the New Three Star brewery marks CREB’s entry into Heilongjiang province, a province with a population of some 38 million people and the highest per capita beer consumption in China. New Three Star is the second largest beer brand in the province and Shangzhi city is located 145 km South East of the provincial capital, Harbin. The initial investment and further spend to balance and expand capacity to 2.5 million hectoliters, is US$ 42 million of which US$35.5 million represents the initial acquisition cost.

The third acquisition is 100% of the Leshan brewery and is CREB’s second brewery in the Sichuan province, which has a population of some 83 million people. It is located 150 km south of the capital Chengdu. The brewery has a current capacity of 0.5 million hectolitres. Total investment spend, including refurbishment and further expansion to 0.8 million hectolitres will be US$ 13 million of which US$7.6 million represents the initial acquisition cost.

These investments are in line with CREB’s expansion strategy and bring its total number of breweries in China to 14, with a combined total capacity of more than 21 million hectolitres.

For further information:

Nick Chaloner, Director of Communications
SAB plc + 44 (0) 20 7659 0119

Anna Miller Salzman, Head of Investor Relations
SAB plc + 44 (0) 20 7659 0106

Salome Brown, Corporate Communications
SAB plc + 27 (0) 11 407 1700

Jonathan Glass, Partner Brunswick Group Ltd + 44 (0) 20 7396 7486

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