Tsing Tao Beer To Open Factory In Pathum Thani

[sbk]

Tsingtao to partner with Thai brewery

By Jiang Jianguo Bloomberg News

Published: October 25, 2007

SHANGHAI: Tsingtao Brewery, the second-biggest beermaker in China, plans to set up its first overseas plant, in Thailand, in a move that aims to avoid import duties on beer.

The company will invest an initial 40 million yuan, or $5.34 million, for 40 percent of the venture, which may produce 80,000 kiloliters, or 21.1 million gallons, of beer a year.

The first phase of the project will cost about 294 million yuan, the company said in a Shanghai stock exchange filing Wednesday, without identifying the planned partner.

The Thai brewery may help Tsingtao increase overseas sales, which account for about 3 percent of revenue, as it faces increasing competition at home from larger rival China Resources Snow Breweries. Tsingtao's domestic market share fell to 12.9 percent last year from 13.3 percent in 2005.

"It's good for Tsingtao to expand outside China, but overseas sales won't contribute to earnings a lot in the near term," said Tong Xun, an analyst at Shenyin Wanguo Research and Consulting in Shanghai.

The shares rose 2.51 percent to 26.55 Hong Kong dollars, or $3.44 in Hong Kong. The stock has doubled this year. The Shanghai-listed stock of the company gained 2.19 percent to 35.99 yuan, or $4.80.

Tsingtao, based in China's eastern province of Shandong, joins companies such as Ford and Honda in seeking to expand in Thailand, where direct foreign investment is rebounding after a military coup last year.

The brewer's overseas sales grew 9.2 percent in the third quarter, slower than the 11 percent gain in total sales. Thailand has seven breweries and had beer sales totaling 2.1 million kiloliters last year, a Tsingtao spokeswoman, Yuan Lu, said.

"Southeast Asia is our fastest growing region for exports, but we pay very high tariffs for Thailand," Yuan said Wednesday. "By setting up the plant, we can boost competitiveness."

Tsingtao faces a challenge to increase sales in Thailand because the government is seeking to curb alcohol consumption to cut health care costs.

The Thai Cabinet in April approved a bill to ban alcohol advertising and further restrict the areas where it can be sold. The National Legislative Council, the junta appointed law-approval body, has been reviewing the draft.

Tsingtao said separately that it plans to invest 267 million yuan to increase its barley production by 100,000 metric tons a year in its home city of Qingdao. Barley is a main ingredient in beer.

Tsingtao, 27 percent-owned by Anheuser-Busch, the second-largest brewer in the world, said Tuesday that third-quarter profit rose 52 percent to 328.6 million yuan and sales increased 15 percent to 4.2 billion yuan.

www.iht.com

[Prakanong]

I like that stuff - good news

Interesting history from Wiki

"The brewery was founded in 1903 as a German-British brewing company to produce German style beer in China, producing beer mainly for Germans and other Westerners in China. In 1915 the brewery was taken over from the German management and until 1945 was under Japanese management, who had confiscated the German share and bought the British share after World War I.

After the defeat of Japan in World War II the Qingdao Brewery was turned into a Chinese brewery under the supervision of the Nationalist government in Nanjing. However, this period of ownership only lasted until 1949 when the People's Republic of China was founded and the company became a state-owned enterprise.

The company was privatized in the early '90s and in 1993 merged with three other breweries in Qingdao and was finally renamed Tsingtao Brewery Company Limited. Today 27% of the company is owned by Anheuser-Busch. The company now owns several other breweries in China, some of which also produce Tsingtao Beer."