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CHINA: Rising costs pressure Tsingtao investments - report

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Tsingtao Brewery Co. is considering cutting back on investments in the rest of this year, according to local reports.

The Chinese brewer, which is 27%-owned by Anheuser-Busch, warned yesterday (6 August) that investments in 2008 could come in below last year's. Speaking to local reporters, company chairman Zin Zhi Guo also warned that further price increases could be introduced for its more premium beers.

Tsingtao noted in April that operating costs in the first three months of this year rose sharply, leaping by 13.9% year-on-year, due in part to soaring wheat prices. Going forward, rising raw material costs, coupled with the appreciation of the yuan, will make their presence felt more keenly in 2008, the company said at the time.

Net profits for the first three months of 2008 leapt by 216.7% on the corresponding period a year earlier, reaching CNY129.6m (US$18.5m), thanks in part to price rises on some of its beer brands in China.

Jin also said that the Chinese beer industry was ripe for consolidation, with rising raw material prices squeezing smaller brewers.

Tsingtao is China's largest brewer in sales terms.


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