Beer giants battle for China market

[Finer in China]

Beer giants battle for China market

 

The July 2008 merger of Belgian brewing giant InBev with America's Anheuser-Busch has upped the stakes in the battle for the Chinese beer market, say analysts.

 

Growing dominance of multinationals

 

The merged company, Anheuser-Busch InBev (AB InBev) is now the world's largest brewer accounting for approximately one quarter of global beer production and sales of US$ 36.4 billion.

 

In China, apart from owning the Budweiser brand, AB InBev has inherited dominant positions in the southeast where InBev had 33 breweries, and the northeast where AB owned Harbin Beer.

 

The world's second largest brewer South African Breweries (SAB) owns Shenyang Snowflake Beer and Sichuan Blue Sword Beer as well as a 49 percent stake in China Resources Breweries.

 

Western China's beer market is dominated by Carlsberg Beer, which owns the Kunming Huashi Beer Company, Chongqing Brewery and the brewing division of the Xinjiang Hops Company.

 

In China as a whole, Yanjing Beer and Henan Jinxing Beer are the only two domestic brewers without foreign partners.

 

In 2007 the combined production of AB and InBev was 9.88 million kiloliters, compare with the 6.9 million kiloliters produced by South African Breweries (SAB) and Yanjing’s 4.2 million kiloliters.

 

Ding Feng, director of the Investment Advisory Professional Committee for National Food Industry Productivity Center says the fast growing China market, comprising the world's largest population of consumers, is shaping up as a major battleground for the multinational brewing giants.

 

Domestic brewers under pressure

 

Fierce competition, brand clutter and excessive concentration on the low end of the market are creating difficulties for domestic producers, say analysts. Last year's high prices of barley and hops, the global financial crisis and a domestic price war have put smaller domestic breweries under severe pressure. Large and medium-sized brewers are resorting to mergers and reorganizations to cut operating costs.

 

Financial Crisis has affected AB InBev

 

Not everyone agrees that AB InBev will move quickly to consolidate a dominant position in the market. Some analysts say the global financial crisis will slow the integration of the companies' operations on the ground, and point to the sale of 262 million Tsingtao shares to Asahi to pay off debt incurred to finance the merger.

 

Prepare to pay more for your beer

 

But Ding Feng believes that the long-term future of the beer market lies with the multinational giants and as the market matures and people's expectations improve, the market share of high-end, high-priced brands will grow.

 

Immediately after the merger AB InBev made a strategic decision to divide its Chinese beer brands into three levels, with Budweiser is positioned at the high-end. Some analysts believe the company's strategy is to focus on China's high-end beer market.

 

According to marketing website just-drinks, the global high-end beer market will reach 65.5 million kiloliters by 2013, an increase of 74.7 percent over 2006. In Asia-Pacific, beer production will reach 13.5 kiloliters, an increase of 125 percent. The website says the Chinese market will be one of the main drivers of growth.

 

(China.org.cn by Wu Huanshu February 12, 2009)

http://www.china.org.cn/business/2009-02/1...nt_17264559.htm

[Robert S.]

"Budweiser at the high end..." ???

 

HAHAHAHAHAHA

 

Selling their shares of Tsingtao? What idiots.

[david_dawei]

"Budweiser at the high end..." ???

 

HAHAHAHAHAHA

 

Selling their shares of Tsingtao? What idiots.

I think Microsoft admitted that it too 10 years of attempts to break into the chinese market to realize the western model of 'flexing your muscle' is nonesense... if you want to play in china, you got to know the chinese...

[whome?]

"Budweiser at the high end..." ???

 

HAHAHAHAHAHA

 

Selling their shares of Tsingtao? What idiots.

I think Microsoft admitted that it too 10 years of attempts to break into the chinese market to realize the western model of 'flexing your muscle' is nonesense... if you want to play in china, you got to know the chinese...

 

So what is the chinese market for beer? I agree with Robert. Selling shares of Tsingtao does not make sense. For now some Chinese drink Bud because it is from USA not because the taste is high end. However I dont think "all things USA are better quality" will continue to work in China for marketing. Especially once they begin to taste the better quality European beers.

[Sebastian]

"Budweiser at the high end..." ???

 

HAHAHAHAHAHA

 

Selling their shares of Tsingtao? What idiots.

I think Microsoft admitted that it too 10 years of attempts to break into the chinese market to realize the western model of 'flexing your muscle' is nonesense... if you want to play in china, you got to know the chinese...

 

Ya - Gates pissed off the PRC folks with his first versions - all were made with Taiwanese Staffers who had it all written in Traditional Chinese - and pissed off the PRC folk so much, that they made blatant (and successful) efforts to hack his sh|t, removing all copying schemes.

 

With the exception of the British Occupation of GuangDong Province (1902?) this was the biggest 'mess up' by any entity, imo, corporate or government.

 

But - back to beer.

 

I love GuangDong Beer. Carlsberg just doesn't do it for me.

Edited February 13, 2009 by Sebastian (see edit history)

[Guest Tony n Terrific]

I hate to say this but Chinese Pi Jui beats the hell out of American beer.

[whome?]

I hate to say this but Chinese Pi Jui beats the hell out of American beer.

 

I agree .. especially Tsingtao. Glad to see that when AB brought a minority ownership of Tsingtao they did not try to improve the Tsingtao beer using the BUD standard (bad taste, worse hangover, neat commericals).

[Guest Tony n Terrific]

My travels to China I did notice that Bud and Marlboro cigarettes where considered chic brands and they gave an appearance that you where affluent by using these products.

[Batmaniac]

Much of the various Chinese beers all tasted like Tsingtao to me. Little difference. I can't agree that Chinese beer is better than all US beer . . . but it certaintly has Bud, Miller, Coors beat.

 

Anyone ever have what they suspected to be fake Heineken? icky . . .

 

Oh I saw Harbin at the Chinese grocery store the other day. Surprised the hell outta me!

[Robert S.]

Much of the various Chinese beers all tasted like Tsingtao to me. Little difference. I can't agree that Chinese beer is better than all US beer . . . but it certaintly has Bud, Miller, Coors beat.

 

Anyone ever have what they suspected to be fake Heineken? icky . . .

 

Oh I saw Harbin at the Chinese grocery store the other day. Surprised the hell outta me!

I tried several Chinese beers and disagree with them all tasting like Tsingtao. To my dismay, I ended up in numerous places that didn't sell it as it is my favorite 'local' beer. The other beers with labels looking like a drunk worm crawled through an ink blot tasted like everything from molasses to battery acid. Even Bud tasted better than that stuff.

Oh, that is interesting. I did not try enough to get something bad. Perhaps InBEv has got a good idea after all to try to make Bud more popular. They will have to find a way to reduce the price I would think. I wonder how they are going to factor in the extra expense of sending the beechwood to China. Beech trees don't grow there.