Lion denies China sale

By DITA DE BONI

Lion Nathan has scotched rumours of a sale of its Suzhou brewery in China, but plans to revamp operations there remain on the boil.

The Chinese media yesterday tipped a sale of the loss-making brewery to regional ale-giant Tsingtao, suggesting that a preliminary agreement had been made.

Lion Nathan spokesman Warwick Bryan said rumours of a preliminary agreement were "just that - rumours," but he did not deny that the company was in talks with Chinese breweries to arrest sizable losses.

The Suzhou brewery cost Lion $US170 million in 1997.

It produces almost three-quarters of Lion's China output but has never shown a profit.

The company says its smaller Wuxi brewery - established in 1995 - has always been profitable.

Lion produces four brands of beer for the Chinese market.

Its mainstream brands are Rheineck and Taihushui, with premium brews Becks and Steinlager costing four to five times the cost of an average local brew.

"There are too many people selling beer," said Mr Bryan.

"Our cost base in China is the same as in Australia, but we are up against an overcapacity issue."