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Heineken and China Resources Complete Strategic Partnership Deal in China

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Heineken and China Resources Complete Strategic Partnership Deal in China

Heineken and China Resources Complete Strategic Partnership Deal in China
May 02
10:31 2019

Heineken has completed all transactions to form the long-term, strategic partnership with China Resources Enterprise (CRE) and China Resources Beer (Holdings) (CR Beer) for Mainland China, Hong Kong and Macau. CRE has also become a shareholder in Heineken.

The completion of the transactions enables Heineken, CRE and CR Beer to now start the implementation of their strategic partnership. As part of the strategic partnership, Heineken China’s current operations will be combined with CR Beer’s operations and Heineken will license the Heineken® brand in China to CR Beer on a long-term basis.

China’s beer market, the world’s largest beer market by volume, is now the second largest premium beer market globally and is forecast to be the biggest contributor to premium volume growth in the next five years, driven by its rapidly growing middle class. Profitability of the Chinese beer market is expected to improve significantly, driven by premiumisation, demand for international beer brands and cost optimisation.

The combination of Heineken and CR Beer in China is highly complementary. CR Beer has a best-in-class route to market network, a wide brewery footprint and a deep understanding of the Chinese market. Heineken has proven premium brand building capabilities and a world-class international brand portfolio, led by the iconic Heineken® brand for which it has built strong equity over the years in China.

Under the strategic partnership agreement, Heineken will be CRE’s exclusive partner for international premium lager beers in China. Heineken and CR Beer will investigate which other premium brands from Heineken’s portfolio can be licensed to CR Beer in China. Heineken and CRE will also investigate if the Dutch brewer’s global presence and marketing capabilities can be leveraged to support and accelerate the international growth of CR Beer’s Snow® brand and its other Chinese brands to become the Chinese beers of choice.

Heineken has acquired a 40% shareholding in CBL and CRE owns the other 60%. CRE has acquired 5.2 million Heineken (equivalent to a 0.9% shareholding) for a total consideration of €464 million. Heineken is contributing its operating entities in China, including three breweries, into CR Beer for a total consideration of HK$2.4 billion, through a share sale transaction. Combined, these transactions will result in a net investment of €1.948 billion by Heineken.

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