AN AUSTRALIAN beer brewer – branded Broo – has secured what is believed to be the country’s biggest beer deal in China since the original globalisation of Fosters products.
Impressively, Broo Export Pty Ltd has struck a seven-year agreement with the major Chinese supply and distribution company, Jihua, belevied to be worth more than $120 million in aggregated distribution revenue.
“Jihua’s distribution reach in China will see Broo Premium Lager penetrate the Chinese beer market and expand into a major brand over the coming years,” Broo founder and CEO Kent Grogan said.
Jihua has agreed to purchase the Broo Premium Lager beer products that are manufactured in China, directly from Broo’s approved Chinese manufacturers, Mr Grogan said. The agreement is binding on a ‘take-or-pay’ basis for 1.5 billion litres of Broo Premium Lager beer products over the seven year period.
Mr Grogan said Jihua has also committed significant upfront marketing and advertising funds to expedite the growth volume of Broo in the first three years of the distribution and Broo has agreed revenue payments for that term can be accrued and paid upon completion of the third year, with payments continuing on a six monthly basis thereafter.
It sounds like an ideal launch formula for the relatively small Australian brewer.
Jihua has interests in a wide variety of industries in China and has established quality supply and distribution channels with major Chinese organisations across multiple market segments, including China National Cereals, Oils and Foodstuffs Corporations (COFCO) which is China’s largest food processor, manufacturer and trader; China Aerospace, Science and Technology Corporation (CASC); hypermarkets, supermarkets and convenience store chains throughout China including Wumei Holdings Inc; restaurant chains including China Quanjude (Group) Co Ltd; and hotel chains including Huatian Hotel Group Co Ltd.
“Our focus is now on continuing discussions in other international markets and domestic expansion,” Mr Grogan said.