Investment Analysis On The Brewery Project

With the continuus deepening reform and opening up,the economic development of China is steady and rapidly as well as the more policies good for farmers issued which irritating the beer consumption habit in China. This makes a good opportunity for the local brewing industry to develop quickly.In recent years, it is intend that the yield of beer is increased in fast, the foreign investment enters quickly, the percentage of local made equipments is up, and the management model of brewery becomes nearer with international one.Since the costs of labors increasd and raw materials are going up and the protect ramparts are broken, the competency in China beer market becomes more fierce. A large number of middle and small breweries are faced the crisis of survival for lack of the capability to absorb adverse factors. It is a new choice for the great breweries company to share more market purchasing and controlling the small ones.One of the advantage of purchasing and controlling other breweries is to reduce the competitors, to save the selling cost, and monopolize a market. But it has more advantages to set up a new brewery than to purchase an old one, because that the new one has not the burden to rebuilt the existing equipment and technology, to placement the old staff, as well as it will own the newly equipment ,best designation, and more competency employers.The average beer consumption of one person in Haerbin city is the first in China, and the beer production in Heilongjiang province is the third in China following the Shandong and Guangdong in 2004. Heilongjiang Province is a major province of beer consumption, per capita consumption of beer ranks first in the Northeast, the per capita beer consumption in Harbin City ranked first in the country.Under the great background of realizing the State Strategy to Promote Old Heavy Industry Area in North-east of China, the brewing industry has became the one of three main pillar ones in Heilongjiang province. The beer industry in Heilongjiang Province are facing an unprecedented pattern of integration opportunities, industry-scale and specialized conditions mature.There are two main brewing companies in Heilongjiang province with market share of 35%, the Haerbin brewing group and our branch compay. In 2004, Haerbin group produced beer310000kl, our company produce 280000kl, and other small breweries which capacity is under 100000kl make the rest 111000kl beer.The competition in the beer market of Heilongjiang-Jilin area will be much heated in the coming years with the supply is more than required following by the new brewery running, regional imbalance between supply and demend ,as well as the small breweries loss their living basement from both the competed price and running cost. In addition, small and medium-sized manufacturers are losing survival basis, will ultimately it a try, to the local Market temporary confusion. Competition will continue to focus in the build-up central city and mainstream wine level, however, in the / high-end subdivision and secondary market competition will increase year by year. With the beer market grown in the future, the competition will be changed and the investment input will be altered from short term price profit to the long term brand profit.Since the year of 2000, the main brands of Snow and New Three Star are accepted by many local consumers and selling volume is grow up each year. In 2004, the Heilongjiang branch company sold beer 280,000kl, in which 65000kl is transferred from CRB Group (Jilin) Co., Ltd. and CRB Group (Changchun) Co., Ltd. transferred a total of 6.5 million liters because the limited of product capacity. In one hand, the existing capacity of all the breweries is not enough to supply the requirement, in other hand, some potential markets in this Heilongjiang-In Mongolian areas are need to be developed.The Snow Brand has become the first selling brand in China in 2004. SAB company, the partner of CRB group and the biggest brewing company in the world, will brings the CRB group advanced management, technology and techniques, which will make the CRB group much more stronger. Thinking and comparing the factors of the market, receiving the investment and our strategic developing plan, the Hulan new brewery is prefer than other choices for the branch company.The new brewery is located in Economic Develop Zoon of Hulan district, northwest of Haerbin, where is in the economical transport radius from Haerbin. The location is good for saving greatly transport cost. There is not any heavy industry production enterprises, so the environmental prolusion is few. The local government has some favorite policies which support to requirement of the new brewery greatly. Hulan of Harbin, the current focus on the development of the economic development zone.The local consumers become sensing to the beer flavors and require beer quality keeping in a stable level. The new modern brewery near Haerbin may be sure to guarantee the reliability both for the quality and flavors and to ensure that competition in the market dominance. This is extremely important strategic significance for the CRB group to participate the competition and gets the advance.Through the analysis and demonstration on the background, the market assessment, the possibility, the location, the carrying out scheme, the financial audit, risk preview , investment earnings forecast and making strategy, the new brewery with a capacity of 400000kl (a 230000kl) beer will contribute the share holder a good return on investment , and reasonable economic and social benefits , realize the market strategy, keep the branch continuing development. Conclusion:The project of a new brewery in Hulan will, of cause, has a bright future, I believr.