APB plans to Brew Tiger Beer in Mongolia
Enters into an agreement with the MCS Group for a greenfield project to build a 300,000 hectolitre brewery.
09/11/05 The Mongolians, well-known for their legendary bravery and bravado, will soon be able to hold a locally-brewed Tiger Beer in their hands when Asia Pacific Breweries (APB), sets up its brewery in Mongolia in 18 months time.
The brewer of the world-renowned Tiger Beer has entered into an agreement with the MCS Group for a greenfield project to build a 300,000 hectolitre brewery. This comes hot on the heels of APB's acquisition of a 60% stake in a brewery in Sri Lanka in late September 2005.
The joint-venture, MCS-Asia Pacific Brewery LLC (MCS-APB), is 55% owned by APB while MCS owns the remaining 45%. The brewery is expected to cost an estimated US$15 million and will be funded by a combination of equity, which will be contributed by shareholders in proportion to their shareholdings and borrowings.
Mongolians are no strangers to Tiger Beer as Tiger Export Pte Ltd (TEPL), the export subsidiary of APB, has been exporting Tiger Beer to Mongolia for 13 years. Currently, it can be found in several pubs, bars, restaurants etc in UlaanBaatar, the capital of Mongolia.
The Mongolia beer market is currently relatively undeveloped. APB is keen on this market as demand for beer is expected to grow in the next few years. Although the size of the beer market is small at around 250,000 hectolitres, per capita consumption for its population of 2.6 million is low at 10 litres - allowing for future growth. Furthermore, in recent years, the market has witnessed a shift in demand from vodka to beer as consumers favour liquor with lower alcohol content. Also, a strong drinking culture, in addition to a strong economic growth (10% in 2004), is expected to drive demand for beer upwards.
MCS-APB has assumed the responsibility of importing Tiger Beer into Mongolia while Zuunkaraa Trade Company, a MCS subsidiary that is an exclusive distributor of the MCS Group's range of vodkas and other spirits, will be responsible for all sales and distribution of beer for MCS-APB. Both APB and the MCS Group will work towards building a market presence during the interim period before the brewery is constructed. In this way, Tiger Beer would have gained greater popularity and a larger market share by the time the brewery is ready for commercial production.
