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Heineken Puts China On Tap

Aug. 05, 2018 11:29 AM ETHeineken N.V. (HEINY)6 Comments
Sam Warren profile picture
Sam Warren


  • Heineken purchases a $3.1 billion stake in the world's largest beer distributor, China Resources Beer Holdings Co (CRB).
  • In 2017, Heineken took up 1% of beer volume in China compared to rival Anheuser-Busch's 16%.
  • Premiumization is a growing market trend in China, as the middle class expands and expects more luxury goods.

Heineken N.V. (EPA: HEIA) is trading up today following news of the beer-maker’s $3.1 billion stake in China’s top brewer: China Resources Beer Holdings Co. This is a huge move as CR Beer is the undisputed market leader in China with a strong portfolio of national beers.

In 2017, Heineken was responsible for less than 1% of total beer produced in China. This will give the Dutch company about a 40% stake in China’s largest brewer. This move is almost stunning as it comes on the tailwinds of a $60 billion tariff on U.S. goods by China. Obviously, Heineken is a global company and this move solidifies their plans to plant their footprint in the world’s largest beer market. Per Euromonitor, China is the world’s biggest beer market with $83.3 billion last year in world sales.

Source: New York Times

While Heineken was responsible for less than 1% of beer sales in China in 2017, rival competitor Anheuser-Busch InBev (NYSE: BUD) was responsible for 16%. This acquired stake of China Resources will help Heineken catch up with its competitor and cut into that enormous difference in market capitalization. 2 years ago, Anheuser-Busch struck a deal with China Resources to sell SABMiller’s stake in its Chinese beer joint venture – a venture that SABMiller and China Resources had been a part of since 1994. Then, of course, Anheuser-Busch would buy SABMiller and have an excellent working relation with the large Chinese beer provider.Now, Heineken and CRB are teaming up to challenge the presence of AB’s brand, Budweiser, within the country.

In a statement, Heineken said, “Profitability of the Chinese beer market is expected to improve significantly, driven by premiumization, demand for international beer brands, and cost optimization.”

Premiumization has been no more evident than in the beer industry. A more localized example

This article was written by

Sam Warren profile picture
Providing stock market opinion and analyses for investors by identifying undervalued and growth-potential equities using classic valuation techniques. Long-term investing strategist with a focus on retail, gambling, and fin tech industries. Support, leave a comment, and follow.

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