Heineken is buying a 40 per cent stake in the parent of China’s largest beer company in a multibillion-dollar bet it can challenge arch-rival AB InBev, the Budweiser maker that is by far the leading foreign brewer in the world’s biggest beer market.

The $3.1bn investment — which would give Heineken a stake in CRH (Beer) Ltd, which controls CR Beer — comes as the Dutch brewer has struggled in China. It reported volume growth of about 1 per cent in the first half of 2018, compared with AB InBev’s 3 per cent. Its China business is close to break-even but still lossmaking.

Heineken, which has only a 0.5 per cent share by volume of the Chinese beer market, would merge its own China operations with CR Beer-owned Snow Breweries, brewer of the world’s top-selling beer by volume, Snow. AB InBev has 16 per cent of the Chinese market, according to Euromonitor.

CR Beer is a unit of China Resources, a sprawling state-run conglomerate. Heineken will end up with an indirect 21 per cent stake in the brewer, which will be given a licence for the Heineken brand.

China accounted for $83.3bn in beer sales last year, but volumes have been falling since 2014 as consumers switch

Source