- Published on Thursday, 14 June 2012 08:17
- Written by Staff Reporter
CHINA – Japan’s Suntory Holdings Ltd and Chinese brewer Tsingtao Brewery Co Ltd have signed agreements to form two joint ventures to produce and distribute beer in Shanghai and Jiangsu.
The partners will have 50:50 interests in the joint ventures, with Tsingtao Songjiang – a wholly owned subsidiary of Tsingtao – acting as the platform company through which both companies will consolidate their assets into the joint venture.
The production unit will have responsibility for beer manufacturing, research and development and advertising. Tsingtao and Suntory will invest US1.57 million (RMB 10 million) each in the distribution unit, which will manage shipping and storage, promotion and marketing.
In a statement by Tsingtao to the Shanghai Stock Exchange, the Chinese brewer said the move will allow the partners to achieve synergies in the use of resources, and become stronger competitors in Shanghai and Jiangsu.
For Suntory, this partnership will strengthen the Japanese beverage giant against Chinese competitors. Over the past four years, Suntory has seen its market share in Shanghai shrink from 50% in 2008 to about 30% this year.
Suntory’s rival Asahi Group - which is incidentally the third largest shareholder of Tsingtao with a 20% share – has been transforming its business in China, from directly producing and selling beer in the country to holding controlling stakes in beer companies.
Market analysts say that Asahi’s change of strategy might have led in part to Suntory’s joint venture decision with Tsingtao.