Carlsberg and the Danish Industrialization Fund for Developing Countries (IFU) have agreed with Lanzhou Huanghe Enterprise Group to acquire 50 per cent of the Lan-zhou Huanghe Brewery, which includes three breweries in the Gansu province. The three Lanzhou Huanghe breweries hold a capacity of approximately 2.5 million hl beer and a 36 per cent market share with a rising trend. Furthermore, there is only one more brewery in the Gansu province.
For over two years, the Lanzhou Huanghe Brewery's sales in the Gansu province have developed very positively. The group's strong regional brand Huanghe (Yellow River) is one of only three Chinese beer brands which have been given the title "China's Most Famous Trademark". Over a 10-year period, the present per capita consumption of 8.5 litres in the Gansu province is expected to increase to approxi-mately 20 litres which is the present average per capita consumption in China.
In the neighbouring Qinghai province, a green field brewery with an initial capacity of 0.5 million hl beer will be constructed of which Carlsberg and IFU acquire 40 per cent. Construction will start this summer and until the new brewery is finalized, the market will be supplied from the Gansu province. In the Qinghai province, the present per capita consumption of 12 litres is expected to develop in line with that of Gansu.
Carlsberg and IFU acquire the four breweries in the Gansu and Qinghai provinces at a total price of DKK 115 million. The price equals $17 per hl installed capacity. In 2004, the four breweries' sales is expected to reach a total of 1.6 million hl beer and once the construction in the Qinghai province is finalized, the total capacity of the four breweries will be approximately 3 million hl beer.
The acquisition of a total production capacity of approximately 3 million hl beer and a well-known brand fits well into Carlsberg's strategy to establish a strong position in Western Chinese provinces. Therefore, this investment is a natural extension of pre-vious acquisitions in the Yunnan province and Tibet.
IFU also participated in Carlsberg's previous acquisition in Tibet and the investment in the Gansu and Qinghai provinces is in line with IFU's objective to enter into
projects in regions in great need of economic and social development.
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