The head of Molson Coors Brewing Co has said that a new joint-venture in China will not mark the beginning of a spending spree on emerging markets.
Molson Coors has “no plans” to increase capital investment in China beyond the US$40m the firm will spend to set up a joint-venture with Hebei Si’hai Beer Co, Molson Coors’ CEO, Peter Swinburn, said today (4 May).
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The Canada-based brewer will take a 51% controlling stake in the joint-venture, which it aims to use to build on the success of Coors Light in China over the last seven years.
“It’s got a critical mass, we’ve got brand momentum, so it makes it sensible for us to put [in] fairly limited capital,” Swinburn told analysts during Molson Coors’ first quarter results call.
Coors Light beer volumes have grown by 30% per year in China since the lager was launched there in 2003, according to Molson Coors. The brand is available in 42 Chinese cities.
Molson Coors today reported beer volume sales down 4% in the first three months of 2010, due to sluggish demand in the group’s core western markets of the UK, US and Canada. China drove volume sales up 20% at Molson Coors’ International division, albeit off a small base.
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By GlobalDataThe group’s share price slipped by nearly 1% on the New York Stock Exchange today, even though net profits rose by almost 40% thanks to a one-time tax gain on the firm’s former subsidiary in Brazil.
Despite problems in western markets, Swinburn indicated that Molson Coors’ will not look to buy its way into emerging markets where it has no significant sales presence.
“Our approach to investment into developing markets is that we don’t want to sink capital ahead of our brand developments,” he said.
