Heineken buys $3B stake in China market

Heineken is buying a $3.1 billion stake in China’s top brewer in a bid to challenge Anheuser-Busch InBev’s position as the largest foreign beer maker in the world’s biggest market.

The Dutch brewer will gain a 40 percent stake in the parent of China Resources Beer Holdings Co., maker of the country’s best-selling Snow brand. The move gives Heineken a strong local partner in a market that’s embracing imported beers but has proved challenging for overseas players from Asahi Group Holdings to Carlsberg.

While foreign companies in industries ranging from cars to clothing are stepping up efforts to tap China’s vast consumer market, the beer business is still dominated by affordable domestic brands like Snow. But costlier options like Heineken and AB InBev’s Budweiser are driving growth, with the market expected to expand by 21 percent to $106 billion in just four years.

The trend toward upmarket brews should benefit foreign producers, but many have struggled in a market where a nationwide supply network takes years to build.

China Resources Beer “lacks a premium brand ... and we lack the distribution reach CRB definitely has,” Heineken Chief Executive Officer Jean-Francois van Boxmeer said on a call with reporters.

Japan’s Asahi sold out of its stake in China’s Tsingtao Brewery Co. in December after failing to gain traction for its “Super Dry” brand, while Carlsberg has relied on its control of a local brewer, Chongqing Brewery Co., to build up a presence largely confined to China’s western region.