China’s beer market is the world’s largest by volume.
Heineken has its eyes on the Chinese market.
The Dutch brewer announced a $3.1 billion partnership with government-controlled China Resources Enterprise (CRE) on Friday, in the hopes of tapping into the world’s biggest beer market.
Heineken hkhhf will take a 40% stake in CRE’s holding company CRH Beer Limited, which owns CR Beer, while CRE will buy a 0.9% stake of Heineken for $538 million and will license the Heineken brand domestically.
While beer consumption in China has declined overall in the last five years, a , according to Euromonitor, growing into the . China’s beer market is also the world’s largest by volume.
The partnership between Heineken and CR Beer is intended to give the former a greater distribution network, thereby bolstering its ability to challenge Anheuser-Busch InBev’s position in China. The perception of Heineken as a premium brand, in turn, will allow CR Beer to add to its premium beer portfolio and thereby reach more consumers.
Heineken CEO Jean-Francois van Boxmeer echoed this sentiment, that CR Beer “lacks a premium brand for growth,” while Heineken lacks the “distribution reach” that CR Beer has.