Harbin Brewery Group
Executive summary
Anheuser-Busch (AB) Harbin Brewery Group, the fourth largest brewery in China was founded in 1900 and was acquired by Anheuser-Busch (AB) at $720 million in 2004. Known for its Hapi beer, the brewery holds 4% market share in China and is also the leading brewery in Northeast China. The external environmental analysis has indicated the overall attractiveness of the beer industry in China due to tremendous growth potential. However, there are also threats for AB Harbin which will be explained in this report. AB Harbin also reflected a healthy situation from the internal analysis.
There are 3 main problems for AB Harbin which includes the intense competition, increasing expectation and demand from customers and the poor distribution networks in China. The group has proposed acquisition as the main solution to these problems faced. The acquisition will be funded either by internal loans from the existing breweries under AB or through issuing of new shares.
It is important for Harbin to acquire as many breweries as possible since its major competitor is SABMiller. The rational being that if Harbin does not acquire these breweries, SABMiller will, resulting AB Harbin to have a smaller market share. AB Harbin can begin to produce its beer from that location allowing an easier entrance for itself. AB already owns a stake hold in Tsingtao; the next logical move would be to try and acquire 51% of Tsingtao, reducing their competition and allowing them to widen their product category and market share. Acquiring Tsingtao would be challenging and costly, but the overall benefit reaped would surpass the cost. With the current economic crisis looming over Asia, the overall value of Tsingtao would have weakened, along with its share price, thus making it a viable time for AB Harbin to takeover.
1. Introduction
Harbin Brewery Group, the fourth largest brewery in China was founded in 1900 and was acquired by Anheuser-Busch (AB) at $720 million in
Anheuser-Busch (AB) Harbin Brewery Group, the fourth largest brewery in China was founded in 1900 and was acquired by Anheuser-Busch (AB) at $720 million in 2004. Known for its Hapi beer, the brewery holds 4% market share in China and is also the leading brewery in Northeast China. The external environmental analysis has indicated the overall attractiveness of the beer industry in China due to tremendous growth potential. However, there are also threats for AB Harbin which will be explained in this report. AB Harbin also reflected a healthy situation from the internal analysis.
There are 3 main problems for AB Harbin which includes the intense competition, increasing expectation and demand from customers and the poor distribution networks in China. The group has proposed acquisition as the main solution to these problems faced. The acquisition will be funded either by internal loans from the existing breweries under AB or through issuing of new shares.
It is important for Harbin to acquire as many breweries as possible since its major competitor is SABMiller. The rational being that if Harbin does not acquire these breweries, SABMiller will, resulting AB Harbin to have a smaller market share. AB Harbin can begin to produce its beer from that location allowing an easier entrance for itself. AB already owns a stake hold in Tsingtao; the next logical move would be to try and acquire 51% of Tsingtao, reducing their competition and allowing them to widen their product category and market share. Acquiring Tsingtao would be challenging and costly, but the overall benefit reaped would surpass the cost. With the current economic crisis looming over Asia, the overall value of Tsingtao would have weakened, along with its share price, thus making it a viable time for AB Harbin to takeover.
1. Introduction
Harbin Brewery Group, the fourth largest brewery in China was founded in 1900 and was acquired by Anheuser-Busch (AB) at $720 million in