Recent rumors have elucidated that the world’s biggest brewer, Anheuser-Busch InBev (NYSE:BUD) has its eye on China, and it is ready to make moves. China is a country that has especially attracted the attention of many American companies lately, as it now is not only the world’s most populous nation. It also hosts a rapidly growing middle class, and retailers along with food and beverage companies alike have all shown an interest in cracking the country to reap its benefits.
Want China Times reported Tuesday that Anheuser-Busch is making its big China move by working to acquire Siping Ginsber Draft Beer, one of China’s single largest beer factories, for 3.8 billion yuan, or $630 million. Insider sources say that the deal has been in negotiation stages since last September, and although details still need to be ironed out, it looks like both parties are coming closer to an agreement. The deal is expected to benefit both parties because Ginsber will profit from its high price tag, while Anheuser-Busch will be able to take over Ginsber’s market share in China.
According to Want China Times, as of 2011, Anheuser-Busch’s beer production reached 5.66 million tons in China, ranking third, while Ginsber ranked eighth. Ginsber’s single factory production has a capacity that exceeds 600,000 tons.
It is still unclear as to when Anheuser-Busch will make its official move, as the company has to first win approval for acquisitions from the Ministry of Commerce and as of January 11, the Ginsber acquisition had not appeared on the approval list. However, it is clear that the St. Louis, Missouri-based company would like the deal to go through sooner rather than later, because sources report that the acquisition will help Anheuser-Busch take on China Resources Snow Breweries for domination of the country’s northeast region.
According to Want China Times, Anheuser-Busch’s third-quarter report illuminated that the company agreed to acquire five beer factories in China for $1.05 billion in its first three quarters of 2013, and if it can complete all of the transactions, it will eventually be able to meet an additional production capacity of 1.9 million tons in China with the help of Ginsber.
Looking forward, beer expert Fang Gang expects the beer rivalry in China to be split between three domestic brewers: Snow Breweries, Tsingtao Brewery, and Yanjing, along with three foreign brands: Anheuser-Busch, South African Breweries, and Carlsberg. It also wouldn’t be surprising if other foreign brewers work to get their hands on the China gold further down the line.