15 May 2008

Asia Pacific Breweries Builds a New Brewery in Guangzhou

In its continual pursuit for growth in China, Asia Pacific Breweries Limited’s (APB) joint venture company, Heineken–APB (China) Pte Ltd (HAPBC), through its wholly owned subsidiary, Guangzhou Asia Pacific Brewery Co. Ltd (GAPB) will build a greenfield brewery in the Huangpu District of Guangzhou City, Guangdong.

The brewery investment is estimated to be approximately RMB$600 million (or approximately S$120 million). This will be financed through a combination of external borrowings and internal funding by HAPBC’s shareholders in proportion to their respective shareholdings. HAPBC is equally-owned by APB and Asia Pacific Investment Pte Ltd, a 50-50 joint venture of Fraser & Neave and Heineken.

On the Group’s latest investment in China, Mr Koh Poh Tiong, Chief Executive Officer, APB said, “The greenfield brewery investment in Guangzhou is aligned with our growth strategy for China. It is designed to fulfil two key objectives – to accelerate our advancement in South China; and to enable us to focus on further expanding the Hainan market. In recent years, our beer brands namely Tiger, Heineken and Anchor have made significant inroads into South China. To propel HAPBC’s organic growth going forward, we are in need of additional capacity which the new Guangzhou brewery will aptly provide to match the potential demand growth of our brands there. Thus, it is opportune that we invest in a plant in Guangzhou now so as to forge a more significant presence in South China where the affluent coastal areas of Pearl River Delta, including Guangzhou and its neighbouring cities, account for over 80% of the 31 million-hectolitre Guangdong beer market.”

“When ready in 2009, the new brewery will free up production capacity at our Hainan brewery which currently supplies beers to South China. In this way, our Hainan brewery, which is now running at full capacity, can concentrate on further growing its local market where Anchor and Tiger are already choice brands there,” added Mr Koh.

Today, HAPBC’s brewery in Hainan produces one million bottles of beers daily. Of these, a third goes to the South China cities of Guangzhou, Guangxi, Hunan, Fujian, Guizhou, Jiangxi and Yunnan amongst others. To build up greater demand for its beer brands by the time the 2 million-hectolitre brewery is ready, HAPBC through GAPB, will gear up its brand investment efforts and enhance distribution in these areas.

Mr Koh added, “The Chinese economy is expected to continue to thrive, presenting greater opportunities to be tapped on and signifying further growth in the nearly 400 million-hectolitre beer market which grew 12% in 2007. Given the favourable market conditions and potential, I am confident that our Guangzhou brewery will accelerate our growth momentum in South China. I see it complementing our businesses in Hainan and Shanghai; and positioning HAPBC as a significant player in the Pearl River Delta region.”

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