Anheuser-Busch, the world's largest brewer, and Tsingtao Brewery Company, the largest brewer in China, announced today that they plan to form a strategic alliance. The two brewers have signed an exclusive negotiation agreement and are in the process of finalising the terms of the partnership, which would increase the Anheuser-Busch ownership level in the company.

Tsingtao holds an 11% share of the China beer market with its brand Tsingtao, the number-one brand in China. Currently, the Tsingtao brand beer is sold in over 40 countries and regions in the world. Tsingtao's export volume accounts for more than 50% of the total beer export from China.

The China beer market is the world's second largest at 220m hectoliters and has been growing annually at 6%.

"China is a strategically important global beer market, and we are committed to playing a significant role there," said Patrick Stokes, president and chief executive officer of Anheuser-Busch Cos., Inc. "Tsingtao is a well- managed company, and through our planned alliance we are committed to support Tsingtao in maintaining its industry leadership, expand the Tsingtao brand, and learn from the market leader."

Li Guirong, chairman of Tsingtao, commented: "With China's entry to the WTO, the global economic integration process will be accelerated greatly. The strategic alliance between Tsingtao and Anheuser-Busch will join the strengths of two brewing giants and realise the benefits of sharing both sides' resources in the areas of management, technology and capital, thereby improving the management effectiveness, profitability and core competitiveness of Tsingtao.

"The successful marketing experience of Anheuser-Busch in the US may be an example for Tsingtao to follow. The capital and management resources brought to this alliance by Anheuser-Busch will make Tsingtao even more powerful in the rapidly changing market. Additionally, Tsingtao's production bases and sales network in the Chinese market and its successful operational experience will enable Anheuser-Busch to share in the benefits of the rapid growth of the Chinese economy and beer market."

Anheuser-Busch also owns 98% of the Budweiser Wuhan International Brewing Co. in Wuhan, China, where its Budweiser brand is brewed. Budweiser is the leading premium international beer sold in China.

The terms of the partnership will be subject to Chinese government approval.