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SKorean leader urges strong army, citing threat

South Korea Koreas Nuclear

SKorean leader urges strong army, citing threat

SEOUL, South Korea – President Lee Myung-bak said Thursday that South Korea should strengthen its armed forces to cope with a continuing nuclear threat from North Korea despite recent conciliatory gestures.

After raising tensions with nuclear and missile tests earlier this year, North Korea released several American and South Korean detainees, announced it would resume joint projects with Seoul and offered direct talks with the U.S.

Seoul and Washington are studying the offers but have shown no signs of easing pressure on North Korea to disarm through U.N. sanctions imposed after its May nuclear test.

Lee warned that North Korea’s nuclear program continues to threaten stability on the Korean peninsula, and South Korea must not “let its guard down at any time.”

“It’s true that we need a dialogue with North Korea,” Lee said in a televised speech marking Armed Forces Day. But he added, “South-North Korean dialogue and peace will be advanced when we have a strong military with a firm readiness.”

On Wednesday, North Korea’s Foreign Ministry said the country would make decisions on nuclear disarmament “in relation to U.S. policy” toward it.

In response, State Department spokesman P.J. Crowley told reporters that North Korea will continue to face isolation and “significant” sanctions if it is unwilling to give up its nuclear program.

Also Wednesday, U.S. Deputy Secretary of State James Steinberg told reporters in Seoul that Washington is open to dialogue with North Korea if it helps get international nuclear disarmament talks started again, and urged the North to take advantage of the chance.

“There’s a tremendous opportunity now for them to take a constructive measure,” he said.

North Korea has been insisting on one-on-one talks with the U.S. since quitting broader six-nation talks on its nuclear program in April. Washington, which had demanded that the North first return to the six-party talks, is now considering direct talks to push disarmament discussions forward.

Chinese Premier Wen Jiabao is to travel to North Korea next week, raising hopes that he could help produce a breakthrough in the nuclear row. China, North Korea’s biggest source of economic aid and diplomatic support, could be key in pushing for the resumption of the six-nation talks.

Wen also is to meet Lee and Japanese Prime Minister Yukio Hatoyama in three-way talks Oct. 10 in Beijing that are expected to focus on North Korea’s nuclear program and regional cooperation. Lee and Hatoyama will hold bilateral talks a day earlier in Seoul, Lee’s office announced Thursday.

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FEATURE – Asia’s beverage sector fizzes despite downturn

in.reuters.com

FEATURE – Asia’s beverage sector fizzes despite downturn

SINGAPORE – july 20 – The crowds drinking beer in the bustling bars of Mumbai and Shanghai underscore the motive behind a flurry of recent merger and acquisition activity in Asia, with forecasts of strong growth for beer and spirits in years to come.

In China and India, as well as smaller markets in Southeast Asia such as Singapore, Thailand and Vietnam, beer drinking is becoming a popular past time due to rising disposable income and relatively young populations who are embracing the party scene.

“I’m a firm believer in the Asia growth story and when there’s growth there’s going to be increased consumption,” said Edward Chia, managing director of Singapore’s Timbre bars.

“My analysis of trends is that people tend to start drinking beer as the first form of alcohol, then move to wines and spirits. That (applies) to both age and maturity of industry.”

Market research firm Euromonitor International says Asia is the most dynamic region globally in volume for beer, with average annual growth of 8 percent between 2003 and 2008. China is the world’s biggest beer market and India’s $12 billion alcohol market has been enjoying 12-15 percent annual growth.

So it’s no surprise that beverage firms, facing slowing sales in mature markets in Europe, Japan and the United States, have heightened M&A activity in the past few month. Analysts suggest there will be more to come given the outlook for rising alcohol consumption across Asia.

In China, per capita consumption of alcoholic drinks is expected to rise to 53.4 litres by 2013 from 37.8 litres in 2008, according to Euromonitor. It sees consumption in Singapore and Thailand rising to 23.1 and 61.4 litres respectively by 2013 from 21.1 and 48.4 litres last year.

“Expect more activity in the years to come as the major brewers establish or reinforce existing operations in the region, in particular outside the mature markets of South Korea and Japan,” said Euromonitor’s Marlous Kuiper.

Beverage firms are focusing closely on China and India as growth is expected to be rapid due to rising disposable incomes in the world’s third and twelfth largest economies, dented by the downturn but still holding up with forecasts for annual GDP growth of 8 and 6.3 percent respectively.

“The beer market (in China) is set for double digit (revenue) growth in coming years. Its growth will be much stronger than other liquor or wine,” said Jiang Guo-Qiang, general manager and director of Chinese brewer Kingway Brewery.

In line with this sentiment, shares in China’s Tsingtao Brewery have soared 65 percent this year, outpacing a 29 percent gain in Hong Kong’s main index.

China’s beer market was valued at almost $30 billion in 2007 compared with about $17 billion in 2001. Japan’s mature beer market is valued at about $42.5 billion, but its size has been steadily declining from about $51 billion in 2004.

ECONOMIC RECOVERY

Big names such as Diageo, the world’s biggest spirits group, and Japan’s Kirin Holdings are adopting multi-pronged strategies that include mergers and acquisitions and also partnerships with local firms for footholds in markets in India and China which are dominated by domestic firms.

Diageo said in June it had teamed up with Chinese white spirit producer Shui Jing Fang to make a premium vodka in China. It is also in talks to pick up a stake in India’s United Spirits.

Meanwhile, Heineken, the world’s third-largest brewer, in May reached a deal with India’s largest brewer, United Breweries, to bottle and distribute its brands in India.

In fact, eight out of the top 10 brewers in China have some level of foreign ownership, according to Euromonitor.

Analysts say there is a strong correlation between alcohol consumption and industrial output growth, boding well for brewers as the economy recovers.

China’s Snow beer is now the world’s second-biggest beer brand by volume, replacing Anheuser-Busch brands, Bud Light and Budweiser. It is brewed by SABMiller and its Chinese partner China Resources Enterprises Ltd.

“China and India will take the lion share of volume due to huge population growth but opportunities exist in other markets like Vietnam and Thailand,” added Kuiper.

The Philippines, Singapore, Thailand and Vietnam all saw buoyant beer sales in 2008.

Singapore, said analysts, has single-handedly defied the gloomy environment of mature markets such as the UK and United States with drinkers drawn to outlets such as microbreweries.

Despite Singapore’s worst ever recession, foreign beer companies are still moving in.

“People will drink anyway if you offer the right beer,” said Romtham Setthasit, the director of Thailand Tawandang Microbrewery’s Singapore operation, which opened this month.

Volume growth in Asia-Pacific beer markets is expected to outstrip growth in world markets in coming years, with forecasts for annual growth of 7.5 percent in 2009-10 compared with 4.1 percent growth globally, according to Euromonitor.

ON THE PROWL

Japan’s Kirin, the maker of Lager Beer, eyes the ASEAN region for future growth and is in talks with the Philippines’ San Miguel Brewery’s (SMB) parent company to buy its overseas beer business.

Kirin bought a 48 percent stake in SMB earlier this year and snapped up Lion Nathan, Australia’s second biggest brewer, for $2.5 billion.

“We have made good progress in Oceania, so the next is ASEAN and mainland China,” said Makoto Ando, head of Kirin’s investor relations. “ASEAN has a big growth potential,” he said.

Japanese brewer Suntory Holdings, maker of the popular “Premium Malt” beer, says it is mulling a merger with Kirin, a deal that would create one of the world’s largest beverage firms.

In Australia, North America’s Molson Brewing Co last year took a five percent interest in Foster’s Group Ltd, Australia’s largest brewer.

There is talk that Foster’s may separate its struggling wine business from the beer unit, valued at more than $10 billion, in a move that could signal a possible split when market conditions improve and wine earnings recover.

“It is more likely a when, not an if,” said Kristan Walker, retail and beverages analyst at Deutsche Bank. “You are probably looking at two scenarios, either a trade sale or a demerger.”

If there was a split, Foster’s beer operations would likely appeal to brewers such as Molson and Asahi, drawn by a market with healthy margins due to its domination by two big players.

BRANDING

As Asia’s market gains momentum, local brand names may have an edge over imported brands because they can sell at lower price points and have more efficient distribution networks.

In India, rationalisation of import duties has brought down prices of imported alcoholic drinks brands, while a move in 2005 to allow beer and wine to be sold at supermarkets has encouraged demand for liquor and global brands.

India is now the second-biggest market for Ciroc, Diageo’s “superluxury” vodka. Its Black Label whiskey is an “iconic brand” in India, said Diageo’s Asia-Pacific President John Pollaers.

United Spirits Managing Director Vijay Rekhi says Indian consumers have only recently embraced “labels” and per capita consumption has risen. It stood at 2.3 litres in 2008 versus 0.3 litres in 2003 according to the World Health Organisation.

“Brand consciousness amongst consumers has finally permeated into the spirits category as well,” Rekhi said.

It’s being felt elsewhere in Asia, a region where people are so conscious about brands that they pay huge amounts for designer bags, clothes and even alcohol bearing high-end labels.

Singapore’s national beer Tiger is losing popularity among young drinkers who opt for imported beer with brand cachet.

“Younger Singaporeans don’t drink that much Tiger Beer and go for imported beers like Heineken, Erdinger and Kilkenny,” said Tibre’s Chia.

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North Korea ‘in final uranium phase’

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North Korea ‘in final uranium phase’

“Uranium enrichment tests have been successfully carried out and that process is in the concluding stage,” state media were quoted as saying.

If confirmed, the move would be in defiance of international pressure for the North to abandon its nuclear work.

The UN passed tougher sanctions after a nuclear test by Pyongyang in May.

Both that test and an earlier nuclear test by North Korea in 2006 were understood to have been plutonium-based warheads.

Defiance

The North’s KCNA news agency reported that North Korea’s delegation at the United Nations had written to the Security Council, saying Pyongyang was now ready “for both sanctions and dialogue”.

“Reprocessing of spent fuel rods is at its final phase and extracted plutonium is being weaponised,” the AFP news agency reported the delegation as saying.

“If some permanent members of the UN Security Council wish to put sanctions first before dialogue, we would respond with bolstering our nuclear deterrence first before we meet them in a dialogue,” the delegation said.

South Korea’s defence minister had warned in June that the North was going ahead with plans to enrich uranium, a step towards making nuclear weapons.

Observers say the US has long suspected the existence of a secret uranium enrichment programme in the North, though experts say it remains little-developed.

In the past few months, North Korea has fired a long-range rocket over Japanese territory and conducted an underground, plutonium-based nuclear test.

Renewed tensions

But more recently, the secretive communist nation has made more conciliatory gestures on the world stage.

Two US reporters and a South Korean worker were released from detention and Pyongyang said it was interested in resuming cross-border tourismand industrial projects with the South.

Less than two weeks ago, the first meeting between officials from the North and South for nearly two years took place unexpectedly in the southern capital, Seoul.

However, the latest communique indicated that the North was unhappy that the UN allowed South Korea to launch a satellite last month, after having condemned its own rocket launch in April, Reuters reported.

Correspondents said Pyongyang’s latest remarks appeared to seek once again to ratchet up tensions on the Korean peninsula


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