Shangri-la Highland Craft Brewery, China’s first fully licensed craft brewery, is raising RMB 200 million ($31.6 million) in a Series B round for local and international expansion.
“We are in talks with a China-based private equity firm and hope to close the deal soon,” the company’s founder and chairman Songtsen “Sonny” Gyalzur confirmed to DEALSTREETASIA.
Set up in 2009 on the Tibetan plateau in China’s One Belt One Road area, Shangri-la Highland Craft Brewery, widely known as Shangri-la Beer, is a pioneer of the Chinese craft brewing industry.
Full-scale production at its state-of-the-art brewing facility in Shangri-La city began in 2015. Since then, it has bagged several awards in both international and national brewing competitions.
“We are very confident about the future of our brewery. The craft beer market in China is growing double digits year on year,” he said. “We have some unique selling points like our Himalayan water, the highland barley from the Tibetan plateau which we are using to produce our beers, and our unique Tibetan culture which we are celebrating on our labels.”
After completion of the Series B round, it plans to roll out over 100 Shangri-La branded brewpubs across China as well as export its beers internationally. Shangri-La Beer has already tied up with Carlsberg to be its distribution partner in Europe.
Gyalzur said the brewery has enough production capacity to grow according to its expansion strategy. The company has built up a well-established national distribution model covering 18 provinces and 30 cities, primarily in Western China.
Underpinned by urbanization and a rising middle class, Chinese craft beer industry segment is growing rapidly. Industry experts said the overall production volumes in China are projected to grow at a CAGR of more than 30 per cent.
“Compared to more mature craft beer markets in the Western countries, China’s craft beer market remains under-penetrated with less than 1 per cent market share. Meanwhile, the price of craft beer is 4 to 5 times higher than mainstream beer in China, leading to gross profit margins and net profit margins of 50 per cent and 30 per cent, respectively,” an industry executive, who didn’t wish to be named, said.