Carlsberg boosts Chinese beers and flagship brands with full Wusu ownership
Wusu Beer Group has six breweries in Xinjiang, with a total annual production capacity of around 6m hl. Its products include Wusu beer (Wusu Red, Lite, Green, Pure Draft, Ginger Beer); Sinkiang Beer (regular and stout); and Carlsberg and Tuborg beers.
The group is the market leader in Xingiang, a region in north-west China. Carlsberg has been a majority shareholder for a number of years, and will now gain 100% control.
Carlsberg, Wusu and Xinjiang Hops
Wusu Beer Group is a 50/50 venture between the Carlsberg Group and Xinjiang Hops. As well as direct ownership in Wusu, Carlsberg owns 30% in Xinjiang Hops.
An asset swap will see Carlsberg acquire Xinjiang Hops’ 50% stake in Wusu, and dispose of the 30% stake in Xinjiang Hops. Carlsberg will receive a net cash proceed of 200m DKK ($29m) on completion.
The transaction, conditional upon approvals, is due to finish by the end of the year.
Local beers and flagship brands
Carlsberg’s Asia region accounted for 28% of its global beer volumes in 2014, with the group eyeing up a “very large beer market with good growth potential.” The group has 39 breweries in Western China, where it says it holds the number one market position.
China is the largest beer market in the world, in terms of production and consumption.
Carlsberg officially began business in Greater China in 1978, and now has full ownership or joint ventures across seven provinces.
It says that, through acquisitions, it is trying to raise beer brewing standards and keep local brands.
“The way forward in China in not only through acquisitions. Currently, the focus is on improving the business organically,” a spokesperson told BeverageDaily.com
“However, if value-enhancing acquisition opportunities arise in the future, they will allow us to scale up more rapidly, investing in local infrastructure, where we can then develop and grow local Chinese beers, as well as our international premium brands such as Carlsberg and Tuborg.
“The Carlsberg and Tuborg brands are already performing very well in the international premium category in China. In the case of Wusu, we have been a majority shareholder in the business for many years and will now have 100% control.
“Our strategy in Asia is to build strong, scalable positions and to invest with a long-term perspective in the key growth markets.”
Although acquisition remains a ‘low priority’ for 2015, Carlsberg says – in general – it would look for companies that complement existing structures and networks, company culture, hold good growth prospects, and would provide good performance for shareholders.