CHINA – A strategic business unit of the maker of Snow, China Resources Beer Holdings (CR Beer), has agreed to pay 12.3 billion yuan (US$1.57 billion) for a 55.19 percent stake in a baijiu manufacturer based in Guizhou province.
The Hong Kong-listed company announced that its subsidiary CRWH has agreed with Yichang Caiyuan and Hubei Yihua, the two biggest shareholders of Guizhou Jinsha Jiaojiu Winery, to take their 4.61 percent equity interest in the brand, for a total of 1.02 billion yuan.
CRWH agreed to buy another 50.58 percent stake from two shareholders, worth 11.27 billion yuan, taking its shareholding in Guizhou Jinsha to 55.19 percent upon completion.
Founded in 1951, Guizhou Jinsha Winery produces and distributes baijiu products under the brands Zhaiyao and Jinsha Huisha in China.
Baijiu translates to white liquor and is made from whole grain and the colorless liquor usually ranges in alcohol content from 40-60%.
The deal, which is expected to significantly enhance the group’s profitability and valuation, is part of China Resources Wine’s efforts to diversify its product mix and expand its revenue streams.
The beer company sees the market for baijiu, which it first tapped into last year in August when it entered into an investment in Shandong Jingzhi Baijiu, as holding huge potential.
Industry Arc projects the Baijiu market to grow with a healthy compound annual growth rate of 6.9% during the forecast period of 2019-2025 and the strong aroma to have a CAGR of 6.4%.
Hou Xiaohai, executive director and CEO of China Resources Beer, said: “The acquisition of Guizhou Jinsha Winery is a key initiative of the group’s strategic plans for the baijiu market. It reflects the group’s focus on its alcoholic beverages business, as well as its efforts to facilitate the cooperation between the central and local governments and expand its core business.”
“The acquisition also represents our steady progress in the development of non-beer alcoholic beverages. Guizhou Jinsha Winery has a long brewing history and cultural heritage, which features a unique sauce flavor, presenting extraordinary development potential. We believe…[China Resources Beer] can revitalize Guizhou Jinsha Winery through talent team building, brand development, channel networking, and lean management.”
Looking ahead, CR Beer plans to integrate its existing baijiu business resources and further strengthen the group’s competitiveness and brand value within the Chinese baijiu industry through a ‘dual empowerment’ model to develop both beer and non-beer businesses at the same time.
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