Lion close to Beck's deal for China

By Joe Helm


In a move that will have major benefits for its Chinese brewing business, Lion Nathan is close to signing an agreement to brew and sell Beck's beer throughout China.

Peter Hallwright, corporate relations manager for Lion Nathan said the deal was a provisional licensing arrangement but the details of the relationship between Lion and Brauerei Beck and Co of Germany, which makes Beck's, had yet to be finalised.

Mr Hallwright said the deal would enable Lion to brew Beck's beer in its Suzhou brewery in the near future. Another major part of the deal will see Lion take over the marketing of Beck's beer in China.

That will open up huge opportunities for Lion as it will be able to market its own brands like Steinlager and Rheineck as well as Beck's in new areas of China outside the Yangtze River delta..

There will be an up front cost to the deal, as new staff will need to be hired and new systems put in place. Mr Hallwright said there would be no benefit to Lion's bottom line profit in the first year of the deal..

The agreement with Beck's will also bring the Lion brewery at Suzhou closer to full capacity. The brewery operated at 35 per cent capacity last year when Lion brewed 110 million litres there.

Beck's beer, which has been brewed in China under license since 1992 brewed 35 million litres last year

Mr Hallwright said Kirin beer would also be brewed at Suzhou later this year but Kirin's volumes were significantly smaller than Beck's. Japanese-based Kirin is a major shareholder in Lion Nathan. Beck's is among China's top five foreign beer brands.

Beck's, traditionally made in Bremen, is still brewed according to the strict German purity law of 1516, the oldest food law in the world. Only barley malt, hops, water and yeast are used in the brewing process.

Mr Hallwright said the deal with Beck's improved Lion's brand portfolio in China
as it would move Lion into the high margin locally brewed international brand beer category.

Lion had been seeking to develop a presence in that end of the market for some time.

The deal would also go a small way to rationalising the Chinese brewing industry.