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LONDON - Diageo, the world's largest alcoholic drinks maker, is to tap into China's expanding spirits market with a stake in the nation's oldest distiller of the traditional white spirit "baijiu".
The maker of Smirnoff vodka, Guinness and Johnnie Walker whisky has signed an agreement with Sichuan Chengdu Quanxing for a 43 per cent stake in the business.
Quanxing is estimated to have a market value of $1.18 billion.
Drinks makers, keen to take advantage of the booming economy and rising incomes, have been making acquisitions in China. The country is set to surpass Japan as the world's second-largest spirits maker by value with sales estimated to reach $16.5 billion.
Thirty-five billion litres of beer, wine and spirits were downed in China last year, according to Euromonitor Data. Total sales of alcoholic drinks reached $602 billion in 2005 - an 8 per cent jump on the previous year.
Quanxing has been producing baijiu for 600 years, since the end of the Yuan dynasty and Mongol reign in China.
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