Asia Brewery, Heineken form joint venture

Tycoon Lucio Tan-led Asia Brewery Inc. signed Friday an agreement with Dutch beer-maker Heineken International B.V. to brew Heineken brands in the country, adding a premium brand as a new driver to the former’s beverage portfolio.

Under the agreement, a new joint venture company, AB Heineken Philippines Inc., will be formed, Asia Brewery’s parent firm LT Group Inc. disclosed to the Philippine Stock Exchange Friday.

The two breweries owned by Asia Brewery in Cabuyao and El Salvador will be upgraded so that these can brew Heineken brands.

In the meantime, Asia Brewery will start to distribute Heineken and Tiger in the Philippines.

The “premiumization” strategy in beer production seeks to ride on the country’s increasing consumer affluence.

Heineken is a leading global beer brewer with a portfolio of more than 250 international, regional, local and specialty beers and ciders. It operates 167 breweries, malteries, cider plants and other production facilities in more than 70 countries.

The local venture is seen to implement Heineken’s global policies and approaches in relation to supplier code, local sourcing, water management, employee healthcare and human rights, community investment and responsible alcohol marketing.

Frans Eusman, president of Heineken Asia Pacific, said: “This joint venture with Asia Brewery Inc. in the Philippines represents a good business opportunity for Heineken. It increases our exposure to another market in the region with strong growth potential.”

LT Group chair Lucio Tan said: “Our local knowledge and distri  bution network combined with the brewing and marketing expertise of Heineken will be able to deliver quality beer brands and an exceptional experience for our consumers.”

The transaction is subject to customary closing conditions and operations are expected to start in the fourth quarter of 2016. Financial terms were not disclosed.