Focus - Beer growth set to continue in Asia
By just-drinks.com editorial team | 4 March 2010
Asia's the place to be if you brew beer
On a continent-by-continent basis, Asia is top of the pile when it comes to beer consumption. The region offers many opportunities for growth for the global brewers - welcome words in these trying times. Despite Japan's flat performance of late in the brewing sector, the potential offered by the likes of China and India means Asia is where the beer world is looking in 2010. Gavin Blair in Tokyo, Frances Wang in Shanghai, Raghavendra Verma in New Delhi and Karryn Miller, take a closer look at the region.
The Asian beer market, having overtaken Europe, is now the largest in the world, according to Japanese brewery Kirin. The region accounts for 31.7% of global consumption, compared to 30.8% for Europe, claims the annual report from the Kirin Institute of Food and Lifestyle.
The growth is being led, to nobody’s great surprise, by China and India, while mature markets such as Japan, Hong Kong, Singapore, Taiwan and even Thailand are either flat or declining.
According to data from Euromonitor, the total beer market in the Asia-Pacific region totalled US$133.65bn in 2009. Furthermore, it is expected to reach US$144.15bn by 2012, and US$156.62bn by 2014. (All calculated at 2009 prices).
While China has established itself as the world’s biggest consumer of beer, and this market is certain to keep expanding, India’s growth rates are expected to be even more spectacular. While Euromonitor predicts China’s consumption will grow between 7.45% and 9.5% annually until 2014, India’s will not drop into single figures, and will reach 13.2% during this period.
However, the region’s traditional powerhouse, Japan, has a contracting domestic beer market and this looks set to continue, mirroring weak consumer demand across most retail sectors. This, combined with a strong yen and considerable war chests at the disposal of its major drinks companies, suggests that a strong push into the high-growth territories in the region is on the cards.
“Asia remains a very important area of focus for the Japanese companies, but the Chinese market is already intensively competitive and dominated by domestic brands,” says Yoshiyasu Okihara, an analyst who covers the sector for Credit Suisse in Tokyo.
“Kirin already has its San Miguel stake and will be looking elsewhere to continue its expansion. Meanwhile, Asahi doesn’t have a large stake in any non-Chinese Asian markets.”
The prospects for any organic growth in the region for foreign brewers appear strictly limited. “Without acquisitions they can’t increase their share in Asia because the brands are so strongly embedded already in each country,” suggests Okihara, “It’s the same in Japan – nobody drinks Bud (for example).”
Given this tough overseas environment, the recently failed Kirin-Suntory merger does not seem to have dampened Kirin’s appetite for mergers and acquisitions. “We are looking at every possibility in both domestic and overseas markets, including alliances with local companies,” says Kirin spokesperson Hajime Kawasaki from the group’s Tokyo headquarters. “Asia and Oceania is the most important market in the world for Kirin now. We do not see anything that could slow growth there at this time.”
Statistics from China bear out this analysis. As the world's largest beer market, China produced 42.3m metric tonnes of beer in 2009, up 7.09% from 2008, according to Beijing-based China National Food Industry Association. The growing domestic demand is expected to push the market size up to CNY457.9bn (US$67bn) by 2014 from CNY305.3bn in 2009, according to London-based research firm Euromonitor.
Snow Beer, the star product of Beijing-based China Resources Breweries, a joint venture between Hong Kong-based China Resource Enterprise and SAB Miller, enjoyed a market share of 17% in 2009, maintaining its market-leader status. The next two brands were Tsingtao with 8.1% and Yanjing 5.2%, manufactured by Qingdao-based Tsingtao Brewery and Beijing Yanjing Brewery respectively.
Harbin beer by Anheuser-Busch InBev, the world's largest brewer based in Leuven of Belgium, accounted for 4.7% of the market last year, the leader among solely foreign-owned manufacturers.
According to Euromonitor, Chinese consumers are more likely to buy bottled beer than canned beer, due to the former's lower price. But canned beer, which is considered safer and more hygienic, is becoming more popular, especially among fashion-conscious young people.
There are also regional tasting preferences in China. For example, people in the north-west of the country like strong beer, while in more developed east and south China, light beer dominates the market.
Smaller markets in the region also have a role to play. South Korea is dominated by local breweries and has proved a very tough market for international companies. Hite and Oriental Brewery (OB) control approximately 97% of the Korean market. In recent years the duopoly's domestic success has been mirrored abroad. According to the Korea Microbrewery Association, last year OB exported a total of 7.79m boxes (containing 20 550ml bottles) to more than 30 different countries.
South Korean beer exports totalled $41.8m in 2009, more than double the value of beer exports in 2000, as reported by Korea International Trade Association (KITA). Hong Kong, China, US, Taiwan, Mongolia, and Japan imported the bulk of Korean-produced beer, with Hong Kong importing around 70% of Korea's beer exports.
That said, imports are on the rise in South Korea with KITA reporting foreign beer imports valued at US$37.2m in 2009. American beer once topped South Korea's import list but these days European beers are the drink of choice. The Korea Times reported that about $9.1m worth of Dutch beer was imported in 2009 – accounting for 24.4% of total beer imports.
Japanese beer was the second most popular option, with US brands coming in third. Euromonitor International predicts domestic beer sales will continue to grow at a moderate pace – with imported lager sales expected to grow the fastest of all the beer types.
Meanwhile, the Indian beer industry is set to flourish as new breweries and international brands try to satisfy growing sales fuelled by changing lifestyles and increases in disposal incomes. According to the All India Brewer’s Association (AIBA), in the financial year April 2009 to March 2010, the total beer sales are projected to be around 193m cases or 15m hectolitres, which show a growth of 11% over the previous year.
Sundeep Kumar, AIBA vice president, told just-drinks that there are many opportunities for further growth as Indian per capita beer consumption is still 1.2 litres per person per year, compared to a global average of about 22 litres. Furthermore, beer constitutes only 5% of total alcohol consumed in India against the global average of 50%.
Kumar, who is also director of corporate affairs & communication for SABMiller India, said that the accessibility of new beer brands, coupled with beer retail in restaurants and pubs, offers an untapped market in many booming India's towns and cities.
United Breweries (with its Kingfisher, Sandpiper and Kalyani Black Label brands) and SABMiller India with (Foster’s, Haywards, Royal Challenge and Castle brands) are the major players in India constituting 80% of the market share. Carlsberg, Tiger, Baron, Palone and Mount Shivalik are other beer brands marketed in India.
Sectors: Beer & cider
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Focus - Beer growth set to continue in Asia