CHINA: A-B sets sights on premium beer
Anheuser-Busch is banking on the growing demand for premium beers in China as it looks to boost sales in the world's largest beer market.
Steve Burrows, CEO and president of Anheuser-Busch International, told just-drinks that the US brewing giant wanted to be "a long-term participant" in China's premium beer segment.
A-B, which operates 14 breweries in China and has a minority stake in the country's largest beer maker, Tsingtao, enjoyed rising volumes in China last year. In the last 12 months, the company has launched two premium beers, Harbin Ice and Harbin 1900, brewed at its Harbin brewery in the north-east of China, to capitalise on Chinese consumers' growing thirst for premium brews.
Burrows told just-drinks on Friday (7 April) that the brands had been selling "reasonably well" and that A-B would focus on growing its share of the premium beer category, which was growing at "three or four times the industry as a whole". The segment accounts for around 13% of all beer sold in China, Burrows added.
He said: "That's consistent with our strategy when we first entered China. We didn't go just to sell Bud - we wanted to be part of the whole industry. The premium beer segment is growing at three or four times the industry as a whole - and in some areas, particularly in the south, premium beer is 30% of the whole market. What we're seeing is economic development helping premium beer development."
Burrows said all the multinational brewers present in China were focusing on driving the premium beer category but he added: "It's going to take time - this is not just a one or two-year thing."
However, one obstacle to growing the category was the price of beer in China, Burrows said. "It's one of the fundamental things that has to change. The barrier to improving the pricing environment in China is that a lot of brewers are still driven by market share growth over profit growth."
A-B bought Harbin - then China's fourth-largest brewer - in 2004 after a hard-fought battle with rival brewing giant SABMiller. The London-listed brewer holds a 49% stake in China's number two brewer China Resources Breweries (CRB), which last week begun building a brewery in the city of Harbin.
Burrows said he welcomed the competition in Harbin - provided CRB was looking to "strengthen" the local brewing industry.
"We're a company that isn't afraid of good competition. By good competition, I mean that if (CRB) is in the north-east to build brands and invest in the industry to make the industry stronger and profitable. However, if they're in the north-east to lower prices and destroy the industry, that would be unfortunate. It's really up to them."
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