just On Call - China JVs hold back revenue - Anheuser-Busch InBev CEO
A-B InBev wants to replace local brands with Budweiser in China
Anheuser-Busch InBev CEO Carlos Brito has said that a lack of control over its Chinese joint-ventures has hurt revenue in the country.
The company's partners in the country, which include Double Deer, Tangshan and KK, favour their own local labels over A-B Inbev's premium brands, said Carlos Brito in a conference call yesterday (30 April).
This goes against the company's strategy in China to replace existing local brands with higher-margin beers such as Budweiser and Harbin Ice.
“The problem with these joint ventures is that we share control, have less control and therefore sometimes it's even harder to get them to introduce Budweiser in their market because they want to continue to promote their own local brands,” said Brito in the call, which followed the release of the company's Q1 results.
The company reported overall volume growth in China of 3.2% in its Q1 results. It said its premium brands, which make up about 75% of its business in the country, grew three times that amount, leaving about a 15% decrease in non-premium brands.
“These [JVs] are down volume-wise,” said Brito, adding that this had impacted Q1's revenue per hectolitre because “they don't sell premium brands”.
Brito said the situation was not good for the company's brand portfolio in China. “It's not a place where we have total alignment, let's put it that way,” he said. “And that takes its toll.”
A-B InBev's Q1 statement said that premiumisation is one of the company's main strategic priorities in China.
It said Budweiser is the leading brand in the premium category in China, with the brand's double-digit volume growth acting as the main driver behind a 9.4% revenue per hectolitre growth in the country in the quarter.
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