INBEV WINS CHINESE BREWERY

Well, it looks like InBev, the world’s largest beer producer, beat Heineken and A-B to the punch and is set to acquire Fujian Sedrin Brewery, the 8th largest brewer in China for $750 million. That’s right, only the eighth largest brewery in a fragmented, under-developed country where beer production is not very profitable. Why the mad rush? “I don’t know,” said Joe Zhang, a UBS analyst quoted in the New York Times. Denise Chai, an analyst at Merrill Lynch, agreed. “To quote the former head of Harbin Brewery: ‘Everyone wants a seat at the movie, even though they know nothing’s going to be playing for 20 years.’ It’s a very low-margin, fragmented business.” So perhaps it’s just a fad? However, the major brewers must look to the future to stay in the game, and they all see China as a potential superpower in years to come. They must buy now to keep up with the times, and as it turns out, the deal between InBev and Fujian Sedrin will mark one of the largest acquisitions ever for a foreign company operating in China. Overall, InBev’s jump ahead of A-B and Heineken may come as a surprise since many sources yesterday were predicting Heineken as the highest bidder.