Tsingtao to buy remaining Suntory stake

Tsingtao brewery announced yesterday it is to buy the 50% stake that it doesn’t own in its loss-making joint venture with Suntory Holdings for 822.9m Yuan (HK$129.5m).

Tsingtao said the stake purchase deal includes Suntory Tsingtao Brewery (Shanghai) Co Ltd and Tsingtao Brewery Suntory (Shanghai) Sales Co Ltd, from Suntory.

Trouble could be brewing for the beverage giants as they face stiff competition from other international brands and sluggish sales even though the Asian beer market is set to grow to $202bn by the year 2020 – largely driven by China’s consumption.

The Chinese company will enter into a separate agreement for the rights to use Suntory’s trademarks for a license term agreed by both parties, it said in a regulatory filing to the Hong Kong bourse – though the deal is subject to approval by the Ministry of Commerce, it said.

According to Euromonitor International, despite its presence in the Chinese market since 1981, Suntory had just 1.4% market share in 2014, lagging behind China Resources Enterprise Ltd at 23.2%, Tsingtao at 18.4% and Anheuser-Busch InBev at 14%.

The deal also highlights the challenges Japanese brewers are facing in the global beer market; namely a planned merger of the two biggest players－Anheuser-Busch InBev and SABmiller Plc. 

According to Japanese media, Suntory will now focus largely on soft drinks, white spirits and wine.