Heineken produces brand Heineken and Tiger in China

Heineken produces brand Heineken and Tiger in China

Heineken has said the "vast majority" of the Chinese beer market makes no profits.

Speaking ahead of the opening of Heineken's third China brewery this week, Heineken Asia-Pacific president Frans Eusman said most of the country's 500m hl beer market "is not generating any profit margin". Heineken chooses only to compete in the premium and super-premium end with brand Heineken and Tiger, Eusman said.

Asked whether Heineken would compete in China's mainstream beer market, Eusman said: "We are not very interested in locking up capital in a market that it is impossible to generate a return in." 

Competitor Anheuser-Busch InBev has a broader portfolio than Heineken in China including local brand Harbin. But the Belgium-based brewer still targets the higher-value end of the market because of its bigger margins. In February, AB InBev CEO Carlos Brito said that the super-premium category in China jumped by 18% last year, while the premium category was up 9%.

Eusman's comments could throw light on AB InBev's decision to offload the Snow beer brand to SABMiller's JV partner, CR Snow for US$1.6bn. Snow has some premium extensions but the world's biggest-selling beer brand mainly competes in the mainstream segment.

Eusman said that Heineken's strategy in China is to find the right wholesalers that can get the brewer's brands where they are "relevant to our consumers".

The Asia president was speaking last week at Heineken's Financial Markets Conference in Vietnam. At the same conference, Heineken CEO Jean-François van Boxmeer said that although he is committed to improving the brewer's margins, "it is not an obsession".