BEIJING/AMSTERDAM: Heineken, the Dutch brewing giant, currently holds just 0.5% of China’s lucrative beer market, but it is seeking to raise its profile by signing a deal with the parent company of China Resources Beer, the country’s largest brewer.

In a move that is likely to ramp up its challenge to international rivals AB InBev and Carlsberg, Heineken announced in a statement at the end of last week that it will take a 40% stake in CRH Beer, the owner of China Resources Beer, for HK$24.35bn (US$3.1bn).

At the same time, China Resources Enterprises (CRE), which in turn owns CRH Beer, will buy 5.2 million shares in Heineken for €464.63m, giving it a stake of 0.9% in the Dutch company.

Under the terms of the strategic partnership, Heineken China’s current operations will be combined with those of CR Beer, which will gain exclusive rights to market the Heineken brand in mainland China, Hong Kong and Macau.

It means that Heineken will be able to extend its local foothold and tap into CR Beer’s distribution network, while for CR Beer, which makes China’s best-selling Snow brand, the partnership will help it to advance into the premium beer market at a time when consumer demand for cheaper beer brands is beginning to wane.

“We very much look forward to joining forces with CRE and CR Beer, the undisputed market leader in China,” said Jean-François van Boxmeer, chairman and CEO of Heineken.

“We believe that our strong Heineken brand and marketing capabilities, combined with CR Beer’s deep understanding of the local market, its scale and best-in-class distribution network will create a winning combination in the growing premium beer segment in China.”

Also commenting on the deal, CRE chairman Chen Lang said: “With Heineken’s long heritage and world-class iconic brand portfolio, along with our leading presence and deep understanding of China, we believe we can win together in this new era of the Chinese beer market, in which the premium segment will become increasingly important.

“In Heineken we have found the perfect partner to achieve our ambitions in China and – as an international partner – to support us in growing our business outside China.”

Sourced from Heineken, CRE; additional content by WARC staff