Zhujiang Brewery listing to aid firm's national expansion

By Bao Chang (China Daily)
Updated: 2010-08-04 15:29
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BEIJING - Guangzhou Zhujiang Brewery, which is 24 percent-owned by Anheuser-Bush InBev, launches its initial public offering (IPO) on Wednesday, in which it is expected to raise up to 406 million yuan ($59.93 million) to support the company's nationwide expansion.

Zhujiang Brewery listing to aid firm's national expansion

"The funds raised from the float would be used to establish two beer production bases each with an annual output of 200,000 kiloliters in Hunan province and Guangxi Zhuang autonomous region respectively," Zhujiang Brewery spokesperson Lin Yuanchun told China Daily on Tuesday.

According to its prospectus, the Guangzhou-based company, whose business mainly focuses on South China, is striving to develop Zhujiang beer into a nationwide brand.

The company's sales volume in South China accounted for 84.89 percent of its business last year. Its sales revenue reached 2.83 billion yuan, a drop of 2.98 percent compared with 2008.

Wu Zhengwu, an industry analyst with AJ Securities, said: "Money raised from the listing will help Zhujiang Brewery increase sales revenues and increase beer output."

However, he said he still has doubts about Zhujiang Brewery. "It would be unlikely that Zhujiang beer, a regional brand, could grow into a nationwide brand within five years, because many beer brands already occupy major markets in the country."

In Guangxi, where Zhujinag's new plant is located, Liquan beer of Yanjing Brewery Co Ltd, one of the largest brewers in China, dominates the market, according to Wu. Liquan's sales in Guangxi reached 1.04 billion yuan in the first half of this year, accounting for 13.36 percent of Yanjing's total sales.

At present, Yanjing, Tsingdao and Snow beers rank the top three in China's beer market, according to AJ Securities. Brands like Carlsberg, Zhujiang and Kingway are still focusing on regional markets. Carlsberg has an 80 percent share of the western China market.

China has been the world's biggest beer producer for eight consecutive years since 2001. Last year, China beer output totaled 42 million kiloliters.

"Over the next five years, beer consumption in China will grow by 3 to 5 percent year-on-year," said Xiao Derun, director of the beer department at China Alcoholic Drinks Industry Association.

China Daily