SABMiller vs. Anheuser-Busch: The Takeover Battle for Harbin Brewery


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Case Details:

Case Code : BSTR122
Case Length : 23 Pages
Period : 2002-04
Organization : SABMiller Plc., Anheuser-Busch Inc
Pub Date : 2004
Teaching Note : Available
Countries : China
Industry : Beer

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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End of the Battle Contd...

China had emerged as the largest beer market (by volume) in the world in 2002 and was growing at a rate of 6% per annum through 2003 (See Exhibit II, III & IV for world's largest beer markets, top ten breweries and top twenty beer brands). Along with AB and SABMiller, other major international brewers such as Interbrew, Scottish & New Castle and Carlsberg Breweries also showed interest in increasing investments in the industry (See Exhibit V for a note on China's beer industry). In view of this, industry analysts expected the market to witness more takeover battles in the next few years.

Background Note

HARBIN BREWERY GROUP

The history of Harbin dates back to 1900, when Ulubulevskij, a Russian national, founded a brewery in Northeast China (called Manchuria then), which he named after himself - 'Ulubulevskij Brewery.' The initial objective of the Brewery, considered the first in China, was to supply beer to Russians working on the Trans-Manchurian Railway Project5 started in 1898. In 1908, the company was renamed Gulunia Brewery and its annual production was increased to 1,200 tons from 300 tons in 1900. In 1932, the brewery got one more new name - 'Harbin Brewery Factory', when it went into joint control of Chinese and Czech nationals.

However, with the Japanese emperor Hirohito's forces conquering Manchuria in 1936, Harbin went into the hands of the Japanese management between 1936 and 1945. The Dainippon Malt Wine Company, the largest brewery in Japan, operated the company under the name 'Harbin Brewery Stock Company Limited.'

Later, with the Soviet Red army capturing Manchuria in 1946, the company was controlled by Soviet nationals, who called it Quilin Stock Company Limited. This situation prevailed until 1950. In 1950, when Stalin, the leader of the Soviet Union, ordered the return of Chinese assets, the ownership of the company was returned to the Chinese government. The Chinese renamed it Harbin Brewery and operated it as a state-owned entity. Driven by the famine that struck various parts of China during the 1950s, the company became the first to brew beer with corn instead of rice, in China in 1959. Through the 1960s, the company focused on investing resources to improve its brewing technology, as part of which, in 1973, it installed its first sterilization machine in Heilongjiang Province...

Excerpts >>

5] The Trans-Manchurian Railway project was aimed at connecting Russia and China through rail. The route follows the Trans-Siberian Railroad (that stretches almost 6,000 miles from Moscow to Vladivostok) until Tarskaya, from where it heads southeast into China, ending in Beijing.

 

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