Asahi Considers Tsingtao Share Sale as It Satisfies Thirst Elsewhere

Shares of Japanese brewer Asahi Group Holdings Ltd. rose nearly 2% on Friday after the company confirmed it is considering selling all its shares in Chinese peer Tsingtao Brewery Co. Ltd.

Asahi made the decision based on “its own business arrangement consideration,” Tsingtao said in a filing to the Hong Kong Stock Exchange on Thursday.

Asahi is Tsingtao’s second-largest shareholder, with 19.99% of shares. Bloomberg and The Wall Street Journal had reported in January that the Japanese brewer was considering a stake sale, apparently bringing in financial services firm Morgan Stanley as an adviser. Tsingtao denied those reports at the time.

However, Asahi seems to have become more determined to go ahead with a share transfer as the company is retreating from China.

The company sold 10% of its shares in Tingyi-Asahi Beverages Holding Co., its joint venture with soft drink and instant noodle producer Tingyi (Cayman Islands) Holding Corp., and has said it will sell the remaining 20.4% in June this year. Asahi has also sold two China-based companies — an agriculture firm and a dairy enterprise — to a local peer, New Hope Dairy Holding Co. Ltd.

Asahi’s divestment is partly due to fractious Sino-Japanese relations and is partly a result of its shift to Europe, said Zhu Danpeng, food and beverage industry analyst with the China Brand Research Institute.

The Japanese company bought three Western-European beer brands under SABMiller PLC for 2.55 billion euros ($3.02 billion) and five brands in Eastern Europe from Belgium-based Anheuser-Busch InBev SA/NV, maker of Budweiser, for 7.3 billion euros. Both deals took place last year.

Zhu said that the beer industry in Europe is far more mature than it is in China, including the continent’s industrial chain, supply chain, and research and development.

At the same time, consumers’ love for beer in China has fluctuated in recent years. Data from market research company Mintel showed that beer sales, after having risen 9% annually from 2007 to 2013, declined 1.3% in 2014 to 262 billion yuan. Sales rebounded last year to 267 billion yuan.

European beer consumption is more consistent, Zhu said.

Shares of Hong Kong-listed Tsingtao rose 4.3% on Friday, while its Shanghai-listed shares also picked up 5%.

Contact reporter Coco Feng (renkefeng@caixin.com)