Blog: Heineken fighting to break China
Olly Wehring | 6 September 2006
Strong performances in most of the world’s emerging beer markets led to a set of healthy first-half results at Heineken today (6 September).
Nevertheless, it was interesting to note the comments of Heineken CEO Jean-Francois van Boxmeer on China, a key emerging beer market but also the world’s largest by volume.
Heineken, he said, was close to breaking even in China after over a decade in the country but he insisted it remained a “very tough market”. Multinational brewers have faced difficulties in distributing beer across the country while the very low price of beer makes it a challenge to generate rising profits.
“If you see the selling prices there, and I’m talking about your bread and butter local Chinese brands, then pricing is very low at around EUR22 (US$28.13) a hectolitre. It’s extremely difficult to earn a lot of money,” van Boxmeer said.
“It’s a very tough market structurally. We don’t have a pessimistic view on China but we don’t see going forward anything that will make that situation structurally change. There is chronic over-capacity in the market of around 30%.”
Nevertheless, SABMiller’s Chinese venture said today that its earnings during the first-half had risen 26% to HK$75m (US9.6m) as sales of its national brand, Snow, soared 85%. The venture seems to be succeeding in pushing Snow as a national brand and is fighting it out with Tsingtao for top spot in China.
Heineken, alongside Asian partner Fraser & Neave, has spent much of this year expanding its presence on the continent outside of China, with deals to strengthen their foothold in India, Laos and Vietnam.
It’s vital for Heineken that it doesn’t take its eye of the ball in China and allow its fierce global rivals to grow too strongly in such a key market for future growth in the beer industry.
Paul Walsh just can't stay away from the drinks industry....
For those people looking to the Red Planet as shining utopia away from all things earth, look away now....
Bacardi's 42 Below vodka brand has found a novel way to use the lemons left over from cocktail-making: Turn them into liquid soap....
Philadelphia’s soda tax came into force on Sunday, and is reportedly causing a stir in the city's check-out aisles....
- Ten questions for Diageo - Analysis
- Have spirits companies forgotten the mainstream?
- How craft beer has shattered its US shackles
- Ashwagandha - The next functional drinks trend?
- New CEO sparks optimism at Coca-Cola - Analysis
- Moet Hennessy unaffected by LVMH Dior buy
- BrewDog moves into spirits with LoneWolf launch
- Portman Group heads to Tesco for new chief exec
- William Grant names Europe & NA Travel Retail head
- Johnnie Walker Bourbon Cask & Rye Finish - NPD
- Global Scotch insights - market forecasts, product innovation and consumer trends
- Global Champagne and sparkling wine insights - market forecasts, product innovation and consumer trends
- Battle of the Generations - The fight for iGen, Millennial, Gen X and Baby Boomer consumers
- Craft Beer: Coming of Age or Past Its Prime?
- Myanmar - ISA Country Report