October 13, 2017 4:53 am JST  (Updated October 13, 2017 11:07 am JST)

Asahi aims to sell Tsingtao Brewery stake, go solo in China

Investors welcome move, shares rise in Tokyo and Hong Kong

China boasts the world's largest beer market, but sales have chilled since 2013. © Reuters

TOKYO -- Asahi Group Holdings looks to sell its nearly 20% stake in Tsingtao Brewery in what would be the Japanese brewer's latest divestiture in China as resources are directed toward expansion in Europe.

China's beer market has expanded with the nation's economy to become the world's largest, but sales have retreated since their 2013 peak amid an austerity push by President Xi Jinping and declining consumption by younger individuals. Yet upmarket Japanese-brand beers enjoy growing demand in China, and Asahi intends to cultivate China on its own.

On Friday morning, investors responded positively to the news. Asahi Group Holding shares hit all-time high of 5,004 yen, up nearly 2% from Thursday's close, in Tokyo early morning trading. In Hong Kong, Tsingtao rose 6% to 33.3 Hong Kong dollars in early trade.

Asahi formed its first partnership with Tsingtao, China's No. 2 brewery, in 1997 by establishing a joint venture to produce the Tokyo-based company's mainstay Super Dry brand and Tsingtao's popular beer. In 2009, Asahi acquired a nearly 20% stake in Tsingtao for about 60 billion yen ($533 million at current rates) from the world's largest brewer, Anheuser-Busch InBev.

The Japanese company sought a foothold in China through its capital tie-up with Tsingtao. The brewer considered using Tsingtao's sales network to tap into the Chinese market. But tensions over the Senkaku Islands, which Japan administers but China claims as the Diaoyu, soured the countries' relations and Asahi's plans.

It is unclear whether two joint production companies in the Guangdong Province hub of Shenzhen and the Shandong Province city of Yantai also will be sold. Plans for the potential sale, announced Thursday, did not spell out terms of the deal.

Tsingtao Brewery issued a statement Thursday night saying that the company "will continue to monitor the development ... and make timely disclosures of information in coordination with Asahi Group and its related parties."

At the end of June, Asahi also announced plans to sell its entire stake in Chinese joint venture Tingyi-Asahi Beverages Holding, whose earnings are reflected on the Japanese company's books. The shares will be sold to Tingyi Holding, Asahi's local partner and China's top instant noodle maker, for about 70 billion yen.

Asahi has poured out roughly 1.2 trillion yen to acquire several brands from Anheuser-Busch InBev in western and eastern Europe. Seeing the region as a growth market, the Japanese brewer has indicated plans to review its asset portfolio.

Japanese rival Kirin Holdings also operates a factory in Guangdong. The company's Chinese sales volume rose 10% in 2016 with its mainstay Ichiban beer gaining popularity as a pricier brand.

(Nikkei)

Asahi Group Holdings Ltd.

Japan

Market(Ticker): TKS(2502)
Sector:
Industry:
Consumer Non-Durables
Beverages: Alcoholic
Market cap(USD): 24,583.47M
Shares: 483.58M

Kirin Holdings Co., Ltd.

Japan

Market(Ticker): TKS(2503)
Sector:
Industry:
Consumer Non-Durables
Beverages: Alcoholic
Market cap(USD): 23,006.20M
Shares: 914M
Asia300

Tsingtao Brewery Co., Ltd.

China

Market(Ticker): HKG(168)
Sector:
Industry:
Consumer Non-Durables
Beverages: Alcoholic
Market cap(USD): 6,150.19M
Shares: 1,350.98M
Asia300

Tingyi (Cayman Islands) Holding Corp.

China

Market(Ticker): HKG(322)
Sector:
Industry:
Consumer Non-Durables
Food: Specialty/Candy
Market cap(USD): 10,054.63M
Shares: 5,606.50M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.