Suntory enters into beer venture with Tsingtao

Suntory China has agreed a contract with Chinese brewer Tsingtao to establish a joint beer business in Shanghai and Jiangsu province.

Both parties will contribute 50% to the scheme and announced their agreement last month.

According to China Daily, both companies will contribute 10 million yuan to the scheme and use the Tsingtao subsidiary of Tsingtao Songjiang as a platform company through which they can consolidate their assets.

Suntory has the highest share of the beer market in Shanghai at present and Tsingtao is the second largest brewery by volume in China.

Speaking to the newspaper, secretary-general of the Shanghai Drinks Association, Wu Jianhua, said the move was potentially very beneficial for both companies as Suntory will be able to make use of Tsingtao’s marketing operations and Tsingtao will be able to benefit from the wider distribution channels Suntory possesses.

Marketing and promotion costs will also be brought down for the two brewers as a result of the move as the volume production from the venture could eventually dominate some 30% of the beer market of East China.

Beer consumption and production is growing strongly across Asia, with China’s production rising 10.7% last year to 48 billion litres and consumption rising to 30 litres per capita in recent years.