NETHERLANDS – Heineken, a Dutch brewing company, has struck a US$3.1 billion partnership with a company that controls China’s largest brewer, China Resources Beer, for a 40% stake as they seek to tap a growing thirst for premium brands in the world’s biggest beer market.

According to the company, the partnership will give it a strong distribution network in China and greater access to one of the world’s fastest-growing premium beer sectors.

China Resources Enterprise, which owns CR Beer, will also buy 0.9% of Heineken shares for US$537.5 million.

The combined transactions would result in a net investment of US$2.2 billion by Heineken, the two firms said in a joint statement.

“We believe we can win together in this new era of the Chinese beer market, in which the premium segment will become increasingly important,” said Chen Lang, chairman of China Resources Enterprise.

“In Heineken we have found the perfect partner to achieve our ambitions in China and — as an international partner — to support us in growing our business outside China.”

The companies are conducting due diligence and will need anti-trust approval from China, according to a person with direct knowledge. The transaction is expected to complete by year-end, the person said.

“It is a win-win deal for both companies. CR Beer can, through the partnership, gain a great premium beer portfolio in the short run while the deal can accelerate the Chinese brewer to go overseas with its Snow brand in the longer run,” said Linus Yip, chief strategist at First Shanghai Securities.

He also said he expects the deal will also help China Resources Beer expand its market share and give it a lead over Chinese rivals such as Tsingtao Brewery.

The agreement comes as global beer giants such as Heineken, AB InBev and Carlsberg face fierce competition in emerging markets, touted as the growth engine for the world’s biggest brewers.

Beer consumption in China has declined since 2013 due to changing consumer tastes for alternatives like wine, but the premium beer category has grown by double digits annually since at least 2012, according to Euromonitor data.

Growing demand for high-end beers from cosmopolitan Chinese consumers, who increasingly want more tailored and individual products, could help global brewing giants unlock higher profits in the world’s largest beer market.

CR Beer’s deal with Heineken follows its takeover in 2016 of SABMiller’s 49 percent stake in its CR Snow venture for US$1.6 billion, the acquisition that helped the Chinese brewer turn around its business.