Alcoholic spirits producer Diageo Plc said it has proposed increasing its stake in Chinese baijiu maker Sichuan Shuijingfang Co Ltd to up to 60 percent through a partial tender offer. Diageo offered 62 yuan ($9.44) per share of Shuijingfang, the company said in a statement. It currently holds a 39.71 percent stake in the Chinese distiller…Full Article: China Daily Jan 2018

Key Point

  • According to Shui Jing Fang (SHA:600779), Diageo would invest CNY 6.15 billion [~USD 892 million] to increase its stake from 39.7% to 60%. Diageo is known internationally for its Jonnie Walker Scotch whisky and Smirnoff vodka.

ChinaAg Comments

  • In January 2018, Diageo stated that not only did it hope to become China’s largest whiskey supplier by the end of year, but also that China would comprise 5% of its global whiskey sales. According to IWSR, a liquor market research firm, spirit (liquor) imports account for less than 2% of China’s total alcohol consumption.
  • In 2017, Shuijingfang planned to invest approximately CNY 102 million (USD 15.1 million) on marketing, doubling the amount spent in 2016. The liquor company hopes to expand its distribution network in the provinces of Henan, Hunan, Jiangsu, Guangdong, Sichuan, Zhejiang, Fujian, as well as in the municipalities of Beijing, Shanghai, and Tianjin.
  • In February 2016, UK-based Diageo Plc was expected to increase its sales focus on its Shui Jing Fang baijiu brand at the expense of Scotch whisky in mainland China.
  • In 2014, Hong Kong imported 4.2 million liters of whisky and exported ~745,600 liters of whisky to mainland China, equating to roughly an 18% re-export rate. From 2010 to 2014, total re-export volumes averaged 28% of all imports. The United Kingdom was the top supplier of whiskey.
  • In July 2013, the UK-based Diageo Plc, the world’s largest liquor producer by sales, stated it will acquire the remaining shares of Sichuan Chengdu Shuijingfang Group, also known as SJF Holdco, for 233 million pounds (USD 357.6 million). SJF Holdco is major Chinese producer of baijiu.
  • Founded in 2000 and headquartered in Chengdu, Sichuan Province, Sichuan Swellfun, aka Shui Jing Fang (SHA:600779), is a baijiu liquor manufacturer.

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