The biggest global alcohol companies are sizing up buyout and tie-up opportunities in China, India, South Korea and Vietnam, keen to profit from a $258 billion Asian market that is growing twice as fast as the rest of the world.
Banking and industry sources name Hong Kong-listed Kingway Brewery Holdings, China's Beijing Yanjing Brewery Co Ltd, India's Tilaknagar Industries, and KKR & Co-backed South Korean Oriental Brewery among the potential takeover or joint venture targets for global brewers.
Like many other sectors, the global drinks industry is stepping up its Asian presence to offset sluggish growth at home.
"Everybody wants a slice of Asia," said Deepa D'Souza, a consultant with global market research firm Mintel in Mumbai.
"The global companies who are present there want to expand further and further in markets like China," she added. "The problem is there are not enough suitable assets available and so there is a race to pick up whatever is around and there will be more of the takeover battles we are seeing now."
After a two-month battle last year, Dutch brewer HeinekenNV finally got control of Asia Pacific Breweries Ltd in a $6.4 billion deal. That translated into a multiple of 35 times earnings, amongst the richest paid for Asian beer acquisitions and a sign that global companies are willing to bid up for Asian growth.
World No. 1 Diageo Plc's plan to buy a majority stake in India's United Spirits may spur more deals in that country's competitive spirits segment in the next couple of years, analysts said. The race for partners in India has already begun.
French rival Pernod Ricard SA, which sells brands such as Seagrams whiskey, signed a bottling agreement with Tilaknagar, a senior Tilaknagar official told Reuters.
"We have signed a bottling partnership with Pernod last year and are open to strategic partnerships," said the official, who declined to be named because he was not authorised to discuss internal negotiations. "Discussions are on with Pernod."
Pernod confirmed that it had a bottling deal with Tilaknagar, but declined to comment on whether it was seeking a strategic partnership.
India's second-largest spirits company, Radico Khaitan Ltd, has been talking to international players about a joint venture after its partnership with Diageo ended last year, managing director Abhishek Khaitan said.
Tie-Up, Not Buy Up
Deals in China's spirits segment will be largely limited to distribution tie-ups, although bankers say some acquisitions are possible as the industry consolidates.
The top five brewers in China control about 60 percent of the domestic beer market, compared with South Korea where the top two hold about 90 percent.
"What matters in China is to have a successful joint venture partner and use that platform to sell not only their foreign brands but also help lift the quality of domestic brands and spruce up distribution," said one Hong Kong-based mergers and acquisitions banker who advises brewers. He declined to be named because he was not authorised to speak publicly about the matter.
China's beer market grew by 29 percent in volume terms between 2007 and 2011, and Mintel predicts cumulative growth of 47.5