State-owned firm buys ailing Canadian craft brewing equipment maker DME

State-owned transportation equipment maker China International Marine Containers has taken control of ailing Canadian brewing machine maker Diversified Metal Engineering to further expand its presence in the North American market.

DME, which designs and makes craft brewing equipment and steel tanks for the beverage industry, was acquired by Netherlands-based CIMC Enric Tank & Process for an undisclosed price. CETP is a subsidiary of CIMC Enric Holdings, a Hong Kong stock exchange-listed company, which in turn is a subsidiary of CIMC.

"In developed markets such as Europe and the United States, the beer making industry has entered a more mature phase and the traditional mass-produced beer has failed to meet consumers' demand for customized craft beers with lower alcohol content," said Leo Yang, general manager and executive director of CIMC Enric.

The acquisition was said to match CIMC Enric's ambition to become the world-leading equipment and engineering service provider in the craft beer business.

"Based on research of the craft beer market, CIMC Enric recognized the large potential in the business and has been tracking the beer equipment industry in recent years," Yang said. "DME's craft beer business matched CIMC Enric's strategic vision."

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

"DME owns over 80 percent of the market share in craft beer equipment manufacturing in North America and is a company with high reputation," said Yang. "CIMC Enric, despite its former acquisitions in global beer equipment business, lacks market presence in North America."

"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," Ko Brink, CEO of CETP, said. "Adding DME 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 mature market abroad, CIMC Enric also expects the acquisition to help the company strengthen its position in the growing Chinese market, as CIMC Enric believes the growth pace of craft beer in China will remain at 40 percent each year, although currently the business only occupies 1 percent of the domestic market.

The growing craft beer market in China, however, has attracted more attention. China Resources Beer, for example, benefited from its high-end beer products last year as the sales of premium products rose 4.8 percent year-on-year. It partnered with Dutch brewing company Heineken International to tap into the premium beer market last August.

"Many foreign beer brands are eyeing the Chinese craft beer market, and so are the domestic brands," said Hou Xiaohai, CEO of China Resources Beer. "We have noticed such opportunity, and our strategy is to introduce foreign brands through joint ventures."