S&N set to pull Chinese beer group

Brewing group Scottish & Newcastle today cleared a key hurdle in its drive to secure a foothold in the fast-growing Chinese beer market.

The group, whose Irish operations include the Beamish & Crawford brewery in Cork, has signed a binding legal agreement to purchase a 19.5% stake in a subsidiary of Chongqing Breweries (CBG), the sixth biggest brewer in China.

The £35m (€52m) deal now hinges on approval from the Chinese government and is expected to be completed within a few months.

CBG operates 18 breweries primarily in the south-west of China and has a 10-year-old agreement to brew and supply McEwan’s lager to the Chinese market on behalf of S&N.

The region is one of the most densely populated in the country and Chongqing, which rises above the banks of the Yangtse river, is one of China's largest cities.

S&N first expressed an interest in buying a stake in the Shanghai-listed Chongqing Brewery Company in December and clinched a co-operation deal two months later.

Proceeds will be used to fund CBG’s fast-paced acquisition and expansion programme in neighbouring provinces in China.

Overseas brewers are scrambling for a slice of the potentially lucrative Chinese beer market which is growing at a compound growth rate of 5% each year.

Budweiser owner Anheuser-Busch yesterday headed off rival SABMiller in the race for the Harbin Brewery Group.

Earlier this year, Dutch brewing giant Heineken acquired a 21.6% stake in Guangdong Brewery in southern China through its venture Asia Pacific Breweries.

S&N has market leading positions in 14 countries in Europe and Asia, while establishing joint ventures in emerging beer markets such as Russia, Ukraine, Kazakhstan and India.