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Asia Brewery transforms deal with Heineken into partnership

Asia Brewery Inc., the beer unit of LT Group Inc., said Wednesday it agreed to convert its joint venture with Dutch beer-maker Heineken International BV into a partnership that will produce and distribute Heineken and Tiger brands in the Philippines.

Heineken under the new deal will have separate sales and marketing support for its brands in the Philippines, instead of having a joint venture company that manages them.

LT Group said in a disclosure to the stock exchange Wednesday the board of ABI approved the transition of relationship with Heineken International from a joint venture to a new partnersahip structure.

The two companies did not specify what would happen to the employees of AB Heineken Philippines Inc., a 50:50 joint venture company formed in 2016.

Under the partnership, Heineken will establish a sales and marketing office based in Manila and engage ABI to brew and distribute its beers in the country. The process is expected to be completed by Dec. 31, 2020.

“The immediate priority for Asia Brewery and Heineken is to ensure a smooth transition for the employees of AB Heineken Philippines and continuity for its customers and suppliers,” LT Group said.

“The Philippines continues to present a good long-term business opportunity for Heineken and both Asia Brewery and Heineken remain committed to continue offering Heineken and Tiger beer to consumers in the country,” it said.

Heineken is the second largest beer producer with a global portfolio of 300 beer brands. It operates 165 breweries, malteries, cider plants and other production facilities in more than 70 countries.

ABI and Heineken International formed a joint venture called AB Heineken Philippines in 2016 to tap the country’s growing demand for premium beer.

ABI has breweries in Cabuyao, Laguna and El Salvador, Misamis Oriental that produces beer under the local brand Beer na Beer, Manila Beer and Max Premium Beer.

It was previously the local licensee brewer of Colt 45, Carlsberg, Budweiser, Lone Star and Coors before signing an agreement with Heineken.

ABI also produces non-alcoholic beverage such as Summit and Absolute bottled water, Pacific Sun iced tea, Cobra Energy Drink and 100Plus Isotonic Drink.

ABI reported a net income of P40 million in the first half, down 84 percent from the same period last year.

The dropped in income was due to lower volumes across ABI’s products as the implementation of the enhanced community quarantine affected sales in sari-sari and convenience stores and supermarkets.

First-half revenues also fell 17 percent in the six-month period.

The share price of LT Group climbed 8.08 percent Monday to close at P9.90.

Topics: Asia Brewery Inc. , LT Group Inc. , Heineken International BV
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