APB sells stake in Chinese beer companies to SABMiller JV

Asia Pacific Breweries (APB) has sold its stakes in Jiangsu Dafuhao Breweries Co (DFH) and Shanghai Asia Pacific Brewery Company (SAPB) by selling all the issued shares in Heineken-APB (China) (HAPBC) to China Resources Snow Breweries, a joint venture of CR Enterprise and SABMiller.

The brewing group said that the move is in line with its plan to go ahead with its international premium brand strategy and ensure its production capacities are streamlined in China.

APB's international premium brand strategy primarily focuses on two of its signature international brands, Tiger and Heineken, which the company plans to take to a higher level of success.

The brewing group has built a comprehensive sales and regional network in many areas of the country in order to leverage on the opportunities and gain a national reach.

The strategic marketing initiatives will take advantage of the strong brand equity and international success of Tiger and Heineken, while supply of the beers will be from the company's Hainan and Guangzhou breweries.

APB is boosting production capacities in these two breweries to 2 million and 1.5 million hectolitres respectively, to cater to the rising global demand for these brands.

The CNY870m (nearly $133.9m) transaction does not include the Singapore brewing giant's beer brands, Tiger, Heineken and Anchor, and also Guangzhou Asia Pacific Brewery Co, Heineken APB (China) Management Services Co, Hainan Asia Pacific Brewery Co and Heineken Trading (Shanghai) Co.

APB CEO Roland Pirmez said the three key pillars of the company's international premium brand strategy comprise a distinctive portfolio of international beer brands; strategic marketing and extensive distribution; and optimal production facilities.

Pirmez noted that DFH and SAPB do not align with this strategy, and it made business sense for the company to divest both assets.

"Going forward, we shall further optimise our production capacities in Hainan and newly-commissioned brewery in Guangzhou to cater to the demand for our beers in China," he added.

The developments will mark a 33% increase in production capacity at the Hainan brewery while that of the newly-commissioned Guangzhou brewery will improve by 50%.

APB gained around SG$23.3m ($19.1m) in this transaction by virtue of its 50% stake in HAPBC.