---
title: "Winning Hearts and Minds! China Resources Beer Executives Review AB InBev and Heineken Deals, Earning Over HK$20 Billion from Two Agreements"
description: "China's largest brewer, China Resources Beer, has demonstrated its speed, precision, and decisiveness through two major deals. In an interview with State-owned Assets Report, Hou Xiaohai, general manager of China Resources Snow Breweries, reviewed the 2016 and 2018 transactions with AB InBev and Heineken, revealing that the company earned over HK$20 billion from the two agreements combined."
author: "小食代"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2019-10-13"
categories: "Consumer & Categories, Industry Trends"
language: "en"
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citation: "小食代. “Winning Hearts and Minds! China Resources Beer Executives Review AB InBev and Heineken Deals, Earning Over HK$20 Billion from Two Agreements.” New Distribution, 2019-10-13. https://xinjignxiao.com/en/articles/winning-hearts-and-minds-china-resources-beer-executives-review-ab-inbev-26e27a66/"
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# Winning Hearts and Minds! China Resources Beer Executives Review AB InBev and Heineken Deals, Earning Over HK$20 Billion from Two Agreements

> China's largest brewer, China Resources Beer, has demonstrated its speed, precision, and decisiveness through two major deals. In an interview with State-owned Assets Report, Hou Xiaohai, general manager of China Resources Snow Breweries, reviewed the 2016 and 2018 transactions with AB InBev and Heineken, revealing that the company earned over HK$20 billion from the two agreements combined.

**How "fast, accurate, and decisive" is China's largest brewer, China Resources Beer? The latest "declassified" two deals reveal the answer.**
Today, China Resources Group republished on its official website a special report titled "Agile China Resources" from the September issue of the magazine *State-owned Assets Report*. Foodinc noticed that Hou Xiaohai, general manager of China Resources Snow Breweries (China) Co., Ltd., reviewed in the interview the two major transactions the company reached with AB InBev in 2016 and Heineken in 2018, publicly disclosing for the first time the intriguing behind-the-scenes stories.
Let's take a look at the "acquisition insights" of this domestic beer giant.

**Earned HK$20 Billion**
First, let's recap the background. As Foodinc previously reported, in 2015, China Resources Enterprise, a Hong Kong-listed company under China Resources Group, divested its non-beer businesses, becoming a listed company focused solely on beer, and was officially renamed China Resources Beer.
In the same year, AB InBev, the world's largest beer company, announced the acquisition of SABMiller, creating the largest acquisition in beer industry history. However, due to China's antitrust regulations, to complete the deal, SABMiller, the second-largest shareholder of China Resources Snow Breweries, needed to divest its 49% stake in China Resources Snow.
Subsequently, in March 2016, China Resources Beer announced it had entered into a sale and purchase agreement with AB InBev to acquire the 49% stake in China Resources Snow Breweries held by the foreign party for US$1.6 billion (approximately HK$12.44 billion). This meant that after the transaction, China Resources Snow Breweries would become a wholly-owned beer company under China Resources.
Regarding this transaction, Hou Xiaohai recently commented in an interview with *State-owned Assets Report*, noting that at the time, China Resources Beer was already an independent listed company with a market value of over HK$40 billion. "If we had bought it normally, 49% of the shares would have been a good deal at over HK$20 billion," he said. But China Resources Beer seized the opportunity as AB InBev was eager to sell, "so one acquisition was equivalent to earning HK$10 billion."
Last year's "marriage" between China Resources Beer and Heineken was also a source of pride for Hou Xiaohai.
As Foodinc reported, in August 2018, Heineken Group issued an announcement disclosing that it had signed a non-binding agreement with China Resources Enterprise and China Resources Beer to initiate a long-term strategic cooperation in mainland China, Hong Kong, and Macau.
Under this cooperation, China Resources Beer would issue new shares to Heineken at a consideration of HK$24.35 billion, representing 40% of the enlarged share capital. Heineken would transfer its existing China operations to China Resources Beer, which would merge with China Resources Beer's business. Heineken would grant China Resources Beer a brand license agreement for the long-term use of the Heineken® brand in China.
In addition, the parties would sign a framework agreement allowing China Resources Beer to leverage Heineken's global sales network and marketing capabilities to support the global growth of the Snow® brand and other brands under China Resources Beer, while also managing the licensing of other Heineken premium brands to China Resources Beer.
In the interview, Hou Xiaohai calculated: "In 2016, China Resources spent over HK$10 billion to acquire the 49% stake held by SABMiller, earning HK$10 billion. After the share expansion, it was equivalent to discounting that HK$10 billion by 30%, then selling it for over HK$24 billion, earning another HK$10 billion."
"China Resources signed two agreements in total and earned over HK$20 billion," he said.

**Competing in the Premium Beer Market**
Budweiser APAC, which recently listed successfully, and China Resources Beer, which continues to intensify its premiumization strategy, will be the most fiercely competitive pair in the future battle for China's premium beer market.
Market research firm Mintel, in a report released in December 2018, stated that over the next five years, the retail volume of China's beer market is expected to decline, while the premium trend may sustain retail value growth. **Mintel forecasts that beer retail sales volume will decline from 17.963 billion liters in 2018 to 17.144 billion liters in 2023, at a compound annual growth rate of -0.9%.**
"On one hand, population aging and a decline in the 20-25 age group contribute little to retail volume growth. On the other hand, a reduction in the number of blue-collar workers in cities leads to a decrease in beer sales, especially in low-end products. Therefore, these challenges prompt major beer brands to adjust their beer products to meet the demands of middle- and high-end consumers," the report noted.
Both AB InBev and China Resources Beer have clearly recognized this.
As Foodinc reported, at the 2019 interim results meeting held in August, Hou Xiaohai stated that one of the ultimate goals of China Resources Beer's acquisition of Heineken China was to win the premium market and surpass competitors. "Through this cooperation, we can obtain two resources: one is Heineken's international brand resources, and the other is Heineken's current share in China's premium market and some channel resources."
"By introducing a series of Heineken brands, we hope Heineken can secure the number one position in the price segment between 12 and 15 yuan," Hou further stated, expressing hope to achieve "a market share close to Corona's."
Hou Xiaohai, General Manager of China Resources Beer
He told Foodinc at the time that Snow Beer currently holds about 15% of the premium market. "Our future goal is to be very close to our main competitors, and we hope to occupy at least one-third of the premium market in the future," he said. Currently, the premium beer business "still has a considerable distance from the company's ambitious goals."

**AB InBev is China Resources Beer's biggest competitor in the premium market.**
As Foodinc reported, according to data from independent market research firm GlobalData, in 2018, Budweiser APAC ranked first in China by beer sales value, and ranked first in the combined high-end and super-premium categories, which are growing rapidly, by both sales value and volume—based on 2018 consumption, AB InBev's combined market share in the high-end and super-premium categories was 46.6%.
At the same time, this beer giant continues to benefit from growth in the high-end and super-premium categories. Since 2013, the portfolio of iconic brands such as Budweiser, Corona, and Hoegaarden has achieved over 6% market share growth. In the second quarter of this year, AB InBev reported in its financial results that in China, the super-premium portfolio continued to achieve double-digit growth, led by Corona and Hoegaarden.
Source: Foodinc (ID: foodinc)
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## Citation metadata

- Publisher: New Distribution
- Author: 小食代
- Published: 2019-10-13
- Canonical: https://xinjignxiao.com/en/articles/winning-hearts-and-minds-china-resources-beer-executives-review-ab-inbev-26e27a66/
- Original source: https://mp.weixin.qq.com/s/VNk4aRHy3NjTiBszrf-sBQ

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