Regional Review
Asia/Pacific
Group volume
Asia/Pacific
in millions of hectolitres
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on the Chinese mainland as from 1 April
2004. The new company, Heineken Asia
Pacific Breweries China (HAPBC), will com
bine all operations relating to the brewing
and marketing of beer and other strategic
activities, such as investments, mergers
and acquisitions. Heineken will have a
46.1% indirect interest and Fraser Neave
a 43.9% indirect interest in HAPBC. This
will make HAPBC more efficient and its
commercial policy more effective and will
achieve synergy gains in marketing and
distribution. HAPBC will start producing
Heineken beer locally from the first day,
1 April 2004. This will yield cost savings
on import duties, create greater growth
potential for the Heineken brand and
ensure better utilisation of the available
brewing capacity.
Via HAPBC, Heineken reached agree
ment in January 2004 on the acquisition of
a minority interest in Guangdong Brewery
Holdings, one of the most profitable listed
Chinese brewers. Guangdong has two
breweries and a third is under construc
tion. Kingway, its principal brand, is sold
not only in the province of Guangdong,
which has a population of 85 million and is
one of China's most prosperous provinces,
but also in Hong Kong, Macau and Taiwan.
The Heineken brand will benefit from the
distribution network operated by Guang
dong Brewery, which is making prepara
tions to produce Heineken beer.
Market conditions
In the first half of 2003, the economy of
the Asia/Pacific region suffered several
setbacks, in the form of terrorist attacks
on Bali and in Jakarta and the outbreak
of Sars. The impact of this epidemic was
mainly on China, Hong Kong, Taiwan,
Vietnam and Singapore, but it also had a
negative effect on a number of other
countries. The economic situation improv
ed a little from July 2003 onwards, but
growth rates for most of the countries
were lower than in recent years, ranging
between 2% and 5%. Economic growth in
China, however, turned out at around 8%.
Performance review by country
Beer sales in China were down. Our brew
eries are relatively strongly represented in
the south of the country and in entertain
ment districts, where the impact of Sars
was most marked. Hainan Asia Pacific
Brewery's sales and result were slightly
lower and Shanghai Asia Pacific Brewery,
whose portfolio includes the Reeb Light
and Tiger brands, also reported lower
volume, but sales of imported Heineken
beer were stable.
The process of consolidation in the
Chinese beer market continued in 2003,
and interests in Chinese breweries were
acquired by several international brewers.
The acquisition of a minority interest
in Guangdong Breweries in early 2004
Imported Heineken beer is also available
in several countries in the region and in
some it is brewed under licence. Heineken
beer has already secured a strong market
position in Thailand, Vietnam, Hong Kong
and Taiwan. Heineken has its own sales
offices in Hong Kong, Taiwan, China, South
Korea, Japan, Singapore and Australia.
In January 2004, Heineken and Asia
Pacific Breweries reached agreement
on the amalgamation of their operations
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