Heineken is entering into a partnership with China’s largest brewing company as it looks to make gains in the world’s largest domestic beer market.
The agreement with state-backed China Resources Beer will give the Dutch brand a 20.67% stake in the partnership for a $3.1 billion investment. Heineken will also cede its existing China business to China Resources for around $305 million, which will license the brand domestically.
“China is a continent and we are a small organisation and to scale up for us is just unaffordable,” said Heineken CEO Jean-Francois Van Boxmeer.
China Resources currently brews the world’s largest beer brand by volume, Snow, retailing at around half the price of a Heineken in Chinese stores. The brewer accounts for over a quarter of the Chinese market, according to the Wall Street Journal.