CIMC Enric acquires DME in a bid to expand presence in North America

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Apr 15, 2019, 07:32 ET

SHENZHEN, China, April 15, 2019 /PRNewswire/ -- Chinese transportation equipment solution provider China International Marine Containers (CIMC) announced that it had taken control of Canadian brewing machine maker Diversified Metal Engineering (DME) in a move to further expand its presence in the North American market.

The acquisition was made by Netherlands-based CIMC Enric Tank & Process (CETP). CETP is a subsidiary of CIMC Enric Holdings, a Hong Kong stock exchange-listed company, which in turn is a subsidiary of CIMC.

It was CIMC Enric's fourth significant acquisition in global food and beverage machinery industry after buying Holvrieka, a Dutch stainless-steel tanks maker, Zimann, a German brewery equipment maker and Briggs, a British beer equipment company.

The move will pave the way for achieving the company's ambition of becoming a world-leading equipment and engineering service provider in the craft beer business.

"In developed markets such as Europe and the United States, beer making industry has entered a mature phase. Traditional mass-produced beer cannot meet consumers' demand for customized craft beer and that with lower alcohol content. Against the backdrop, craft beer has become a new trend of consumption in those areas," said Leo Yang, general manager and executive director of CIMC Enric.

"Based on extensive market research, we believe there is huge potential in the business and, therefore, we have been tracking beer equipment industry actively in recent years," Yang said, noting that DME's craft beer business matches the company's strategic vision.

"Despite previous moves of acquisition in global beer equipment business, we still take up a relatively small share in the North American market. The acquisition will help us to expand our presence there," he added.

According to global market research firm Global Market Insights, North America, led by industry players from the US, Canada and Mexico, is expected to take up over 45 percent of the world's craft beer equipment market share. Market size of global craft beer is projected to hit US$500 billion.

Marc de Jong, managing director of DME Process Systems Ltd, the new company set up after the acquisition, said CETP's innovative capability, market share, global manufacturing bases and rich experience will help enhance its brand recognition across the world.

Ko Brink, chief executive officer of CETP, said the new partnership will promote growth of the two sides. "The DME Group brings us an experienced team as well as a great customer base, which allows us to further increase our presence in North America. Also, adding DME/NSI to our group brings two strong brands in the (craft) brewing industry that will greatly contribute to our existing brand portfolio," he said.

Apart from the developed markets, CIMC Enric is also setting its sights on emerging markets, believing Asia Pacific and Middle East regions, especially China, will emerge as a key driver of growth in the coming few years.

"With consumption upgrade in China, Chinese people are now pursuing high-quality life and their demand for craft beer is growing. The rapid increase in the number of returnees has also driven the trend. According to industry data, although craft beer now only accounts for less than 1 percent of Chinese beer market, it is growing at a pace of 40 percent per year," Yang said.

Entry into Chinese craft beer market is DME's vital step in its globalization strategy, he said.

To better explore the Chinese market, DME will establish its Asia sales office in Shanghai and set up production lines in CIMC Enric's factory in Nantong, China's eastern Jiangsu province, so as to gain cost advantages.

"By taking advantage of CIMC's resources, DME will achieve a great development in the Asia Pacific market," Yang said.

CIMC Enric posted 13.05 billion yuan (US$1.94 billion) in revenue in 2018, growing 21.9 percent year-on-year. Net profit of the company surged 87 percent on a yearly basis to 786 million yuan last year.

SOURCE CIMC