The devastating 7.8-magnitude Wenchuan earthquake had demolished one of China Resources' 13 beer breweries in Sichuan, the company revealed yesterday.

However, the group is confident that the quake impact would be limited on the company's brewery business.

At the annual general meeting held yesterday, China Resources Vice-president Chen Shulin told reporters that the company's brewery at Mianzhu, one of the hardest hit areas by the earthquake, had been completely decimated.

"The factory has a production capacity of 20,000 tons," Chen said. Yet, he added that the impact on the group's overall beer production to be minimal, as the other 12 factories are still in normal production.

China Resources produces 7 million tons of beer a year, of which 1 million tons are being brewed in Sichuan, Chen said.

When asked whether the natural disaster will affect beer sales, the vice president said he is confident that Sichuan will return to normalcy soon and demand for beer in other provinces should not be affected.

China Resource's beer business actually posted a net loss of HK$32 million in the first three months of 2008. Chen attributed the tepid sales to the unusual cold weather in the first quarter. "Beer sales are very seasonal, and the loss recorded is normal in the business," Chen said.

Climbing prices in barley, the major ingredient of beer, had already prompted China Resource to increase the price tag on their beer products by 10 percent to 15 percent in the first three months alone.

Chen believes the price increase is still within customers' acceptable range. But whether there will be further price hikes, the vice president said, it all depends on the price of barley.

The company, which owns the "Snow" beer brand, said that they will continue to expand the brewery business through building new facilities, acquiring existing factories and increasing the production capacity of current breweries.

Other than beer, the group is also involved in the pork business through its subsidiary Ng Fung Hong. Chen said that the group currently owns slaughter house and meat processing facilities in three places on the mainland: Shanghai, Shenzhen and Hangzhou.

In the future, China Resources said that it aims to add one meat processing facility a year on the mainland, with the focus on affluent provincial level cities.

As food inflation begins to take the pinch on the wallets of many residents, Chen reassured that pork price should be on a stabilizing trend this year.

He expects that policies to increase pork supply last year will begin to take effect.

Stocks in China Resources gained 2.37 percent or HK$0.60 yesterday to close at HK$25.95.

(HK Edition 05/30/2008 page2)