An insider at Anheuser-Busch InBev (Nanchang) Co. said that Anheuser-Busch InBev has signed an acquisition agreement with Nanchang Asian Brewery (Nanchang Brewery).

The general secretary of the Nanchang Wine Industry Association described Nanchang Brewery as focusing on the medium-end and low-end market, with their main brands Xuejin and Nanchang beer. If Anheuser-Busch can acquire the company, they will be set to take on a huge number of customers.

According to local reports in Nanchang, the mayor of Nanchang invited Anheuser-Busch to invest in the city, and the government would provide certain services to assist the cooperation between Nanchang Brewery and Anheuser-Busch. According to the figures, beer sales in Nanchang total several billions, with the medium-end and low-end products accounting for the majority.

Anheuser-Busch InBev entered the Chinese beer market by acquiring Jinling Brewery in 1997, the company then acquired Harbin Brewery in 2004, and Xuejin Brewery in 2006. Before discussions of acquiring the Nanchang Brewery, the company invested 16 billion yuan [US$2.57 billion] into building a brewery in Shaoyang, Hunan province. The production capacity of the plant is 1 million tons annually.

Experts say that the localization of China’s beer market is the main reason for Anheuser-Busch InBev having such a larger scale than other foreign companies. According to the general secretary of Nanchang Wine Industry Association, foreign brands usually aim for the high-end market in China when they enter, but 70% of China’s beer market is made up of medium and low-end products. “So the company is doing the right thing, and it should be goes further in that direction,” he added.

Source: Morning Whistle Jan 2013

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