China: InBev says cash flow from China to rise

Belgian brewing giant InBev, the world's largest brewer by volume, expects one third of its cash flow to come from China, the world's biggest beer market, by 2010, its chairman said on June 9. But Pierre Jean Everaert told Reuters the Chinese market remained highly fragmented and needed consolidating, while profits could sometimes be difficult to reap.

China's beer industry is growing by 7-10 percent a year and has attracted a flood of overseas investment in the past few years, even though a 640 ml bottle -- just over a pint -- can cost just 12 U.S. cents.

"By 2010, a third or more of our cash flow will come from this country," Pierre Jean Everaert told a business forum in China'a financial stronghold of Shanghai. He did not say to which type of cash flow he was referring.

InBev posted net turnover of 8.57 billion euros ($10.48 billion) in 2004 and cash flow from operating activities of 1.4 billion euros, according to its annual report. The brewer of such brands as Stella Artois and Beck's has steadily made inroads into China since it first arrived on the mainland in 1984, but Everaert declined to offer details on profits.

"China is still a developing market, so profits have been low for a number of years. Right now, it's a step-by-step process," the 66-year-old later told Reuters.

In November, InBev paid $18.2 million in cash to buy out Changsha Baisha Brewery's 45 percent stake in Hunan Debier Brewery.

It currently has 28 production sites in China and employs 14,000 people. InBev describes itself as the third-largest brewer in China, with production capacity of 30 million hectolitres and a market share of around 10 percent.

It is jostling with other global brewers for a bigger share of the Chinese market, ruled by Tsingtao, which is more than quarter owned by Anheuser-Busch. ($1=.8174 Euro)

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .