Foster’s has sold its last remaining Chinese brewery, in Shanghai, to the Japanese Suntory for an estimated $15 million. Like Lion Nathan a few years earlier, also abandoned the Chinese market, which is the second larget beer market in the world.
According to the Sydney Morning Herald:
ABN Amro analyst David Cooke said Foster’s and Lion Nathan’s exit from China was largely a result of the two being out-muscled – and out-capitalised – in the race for Chinese beer drinkers by brewers such as Anheuser-Busch, SABMiller and Heineken.
“Foster’s and Lion Nathan didn’t have the deep pockets that the other players had,” Mr Cooke said.
The Shanghai sale came seven years after Foster’s signalled its first retreat from China with the sale of its Tianjin and Guangzhou brewing businesses. The sale also comes one month after Foster’s announced the sale of the Foster’s brand in Europe to Scottish & Newcastle for $750 million.
Foster’s said it would continue to market its flagship beer brands in China, pointing out that 90 per cent of the beer shipped from its Shanghai brewery were local Chinese brands. However, there is speculation Foster’s may even sell the licensing rights for its brands in Asia. The company ranks its flagship brand as the seventh highest selling “premium brand” in the world, with 100 slabs being consumed in 150 countries annually.
Additional information from the Foster’s Group press release:
Foster’s Group in China
Foster’s Group entered the Chinese market in 1993, acquiring majority stakes in the Shanghai, Guangdong and Tianjin breweries, Foster’s Group sold the Guangdong and Tianjin breweries in 1999.
The Foster’s Shanghai brewery was originally built in 1935 and has undergone two significant capacity and technology upgrades, the first in 1987 and the second in 1997. With production capacity of 1 million hectolitres, the brewery produces the Shanghai Lager, Guangming, Qing Yi, Yi Hao and has been brewing the Foster’s Lager brand since 1997.
The Foster’s Brand
First brewed in 1888 by the Foster brothers in Melbourne, Australia, Foster’s Lager is one of the world’s best beers. As one of only a handful of truly global beer brands, Foster’s in now available in over 150 countries. Foster’s is one of the fastest growing international premium beer brands in the world and has enjoyed international growth of 40% since 1997. Foster’s is brewed in 12 countries, at 17 locations with over 100 million cases of Foster’s sold annually.
Suntory in China
In 1984, Suntory established China Jiangsu Suntory Foods Co., Ltd. in Lianyungang, Jiangsu Province, as the first foreign company to become a joint venture brewer in China. The company entered the fast growing beer market in Shanghai in 1995 and achieved the number one position in Shanghai in 1999. Suntory Shanghai has maintained a steady growth and produced and sold the first draft beer in the region. In 2005, Suntory acquired the Shanghai Donghai Brewery, and now holds a 54% market share in Shanghai