UPDATE 1-Carlsberg to tap China growth with giant brewery

(Adds detail, background, share price)
* To build brewery in Yunnan province
* Brewery will be its second biggest
* To invest 4 billion Danish crowns in project
* Shares down 0.5 percent

COPENHAGEN, June 13 (Reuters) - Carlsberg is to
build a giant brewery in China to tap growth in the world's
largest beer market, as the Danish group looks to expand outside
sluggish European markets.
The world's fourth-biggest brewer will sign the deal on
Friday to coincide with the visit to Denmark of Chinese
President Hu Jintao, and spend 4 billion Danish crowns ($670
million) on the project in the southwest province of Yunnan.
China, which overtook the United States as the world's
biggest beer market in 2003 and was nearly twice the size by
2010, is expected to grow 5 percent annually in coming years,
twice the growth of the global market in 2011.
Copenhagen-based Carlsberg is looking to Asia, especially
China, India and Vietnam, to offset stalled growth in its former
powerhouse in Russia which brought in big tax rises. It now
earns around 11 percent of group profit from Asia.
While Carlsberg is the biggest beermaker in western China
where it runs 41 breweries either fully or in partnerships, it
lags other foreign and domestic brewing heavyweights elsewhere.
China's four biggest brewers - China Resources Snow (CRS),
Tsingtao , Anheuser-Busch InBev
and Beijing Yanjing Brewery - have nearly 60 percent
of the market and are all looking for local partners to
strengthen their positions.
CRS - the largest brewer and a joint venture between China
Resources Enterprise and London-listed SABMiller
- makes Snow, the world's biggest beer brand.
The four big brewers are all bidding to buy most of the
operations being sold by Chinese peer Kingway Brewery Holdings
, worth around $700 million.
Carlsberg's new brewery will start in 2014 and produce local
brands as well Carlsberg and Tuborg to become the group's
second-biggest site with an annual capacity of 10 million
hectolitres, behind its Russian Baltika brewery at 12 million.
"The brewery will be gradually built over a period of time
to suit China's growing demand for beer in the future," a
Carlsberg spokesman said. Carlsberg's Asian beer volumes grew 14
percent in the first quarter.
Carlsberg shares were down 0.5 percent at 0945 GMT, with
Copenhagen's benchmark index down 0.1 percent.
($1 = 5.9664 Danish crowns)

(Reporting by Mette Fraende and David Jones in London; Editing
by Dan Lalor)