Heineken cements Chinese position

31/03/05 Heineken N.V. has finally managed to cement its expansion in China, by acquiring a 40% stake in Jiangsu DaFuHao Breweries Co, Ltd (DaFuHao). The total acquisition is valued at USD 28.6 million (EUR 22.1 million) of which Heineken’s share is 46.1% (or EUR 10.2 million).

As a result of this transaction, HAPBC’s (a 50/50 joint venture between Asia Pacific Investment Pte Ltd. and Asia Pacific Breweries Limited) market position is significantly strengthened in the adjacent provinces of Jiangsu and Shanghai.

The DaFuHao stake is HAPBC’s second recent investment in China. In January 2004 it acquired a 21% interest in Kingway Brewery, which brews the Kingway beer in Guangdong province and is one of the most profitable listed brewers in China. HAPBC also owns Shanghai Asia Pacific Brewery, where Heineken beer is brewed for the Chinese market and Hainan Asia Pacific Brewery.

Thony Ruys, Chairman of the Executive Board of Heineken N.V. said, “Jiangsu DaFuHao Breweries’ profitability in a competitive market such as Jiangsu, is a testament to its strength. With a strong position in one of the key beer markets in China, the acquisition of DaFuHao is a further step in our long-term growth path in China. It is consistent with Heineken’s strategy of focusing on acquiring interest in breweries with quality earnings stream. Furthermore, it’s an excellent opportunity for the Heineken brand to benefit from DaFuHao’s distribution network in the Nantong region for further growth.”

DaFuHao, incorporated in 1996, is based in the city of Nantong, located in the Jiangsu Province, on China's southeast coast. Being one of the most profitable breweries and ranked amongst the top five brewers in Jiangsu, DaFuHao owns four breweries with a total production capacity of 3.5 million hectolitres in Nantong, Tongzhou, Qidong and Yancheng. It brews, markets and distributes major beer brands including “BBOSS”, Tongzhou and Changjiang, which are popular in Nantong. The flagship brand “BBOSS” is also marketed and sold in other parts of the Jiangsu Province. The brewery has a 12% market share in the Jiangsu province and 60% market share in the 1.6 million hectolitre Nantong region. In 2003 DaFuHao sold a volume of 1.4 million hectolitres and the turnover was EUR 22 million. The brewery employs approximately 1,200 staff.