China Resources Beer (Holdings), China’s leading brewing group in which Heineken holds a 40% stake, is diversifying its portfolio into liquor and non-alcoholic beverages. Nikkei Asia reported today, that China Resources Liquor Holdings plans to buy a 40% stake in Shandong Jingzhi Liquor Co., a producer of baijiu, a traditional sorghum-based liquor.
"We will diversify our alcohol business", said CR Beer CEO Hou Xiaohai. "Baijiu is not only the first choice in this strategy, but also a strategy to be implemented in the first year of the '14th Five-Year Plan'," he added. Synergies are expected to come from marketing Jingzhi Baijiu through CR Beer’s network of retailers and restaurants.
China Resources Liquor Holdings was established at the end of last year and is located in Hainan Free Trade Port, where it enjoys preferential tax policies. The company is a wholly-owned subsidiary of China Resources Snow Beer Co., a subsidiary of CR Beer.
In March, CR Beer already made its first major foray outside of the beer sector when the company launched Xiao Pi Qi, a low calorie, fruity, carbonated drink with natural fruit juices. The non-alcoholic beverage featuring lychee and rose flavors has the same color as beer and its foam texture as beer, and also has malt composition and hops. However, “this new product is not fermented, so it’s not alcohol free beer,” the company explained on its official wechat account at the launch. With Xiao Pi Qi, the company wants to attract mainly health-conscious consumers who usually shun beers.
The move away from beer and the broadening of the product portfolio comes at times, when overall beer sales in China are declining. In the five years through 2020, beer sales in China fell about 11% by volume, forcing mass beer producers like CR Beer to cut back on the number of breweries in the country. (inside.beer, 24.3.2021) At the end of 2016, China’s biggest producer of beer still operated 98 breweries across the country. In June 2021, nearly five years later, this number was reduced by one third to 68.
In order to take profit from rising household incomes and the shift towards higher priced premium brands, CR Beer and Heineken decided in November 2018, to combine their both business in China with Heineken becoming a 40% partner in the combined business. (inside.beer, 3.11.2018)