Anheuser-Busch Looks to China
A-B will boost Budweiser's availability to 200 county-level cities in China starting this year, doubling its presence from 100 now, the company said in an e-mailed statement. Counties are China's smallest cities.
A-B also is extending its Harbin beer to 33 new cities in China, along with its imported Corona beer from Mexico, to attract drinkers willing to pay more for overseas brands. A-B is focused on China to reduce its dependence on the U.S., where it gets 65 percent of volume and growth has slowed to about 1 percent a year.
The St. Louis brewer and other companies "are trying to move into the emerging markets and really establish their brands," said Tom Leritz, a portfolio manager at Argent Capital Management in Clayton. A-B is anticipating "the time when people in those regions become wealthy enough ... to buy more beer."
China contributed 45 percent of the growth in international beer volume over the last five years, according to A-B, which operates 14 breweries in China. Last year, A-B's volume and profits grew at double-digit rates in China.
International brewers are again targeting China's high-end market after efforts to sell more expensive beers failed in the 1990s, when most drinkers preferred cheaper local brands. SABMiller PLC, the world's sixth-biggest brewer, plans to introduce its Miller brand in China.
China is the world's largest beer market with 244 million barrels in 2005, according to data by Canadean Ltd. The U.S. is the second-largest at 208 million barrels.
China's beer sales jumped 16 percent to $10.8 billion in 2006, as rising affluence and increased marketing spurred consumption. Per capita consumption of the beverage will double to 50 liters a year in the next decade from 25 now, Anheuser-Busch forecast. Legal Chinese beer drinkers consume only about one-fourth the quantities U.S. drinkers consume, according to London-based Euromonitor International.
A-B will integrate its Budweiser and Harbin brands, combining promotional budgets, sales and research efforts to make them nationwide brands.
The company acquired century-old Harbin, China's fifth-biggest brewer, in 2005, and has a 27 percent stake in Tsingtao Brewery Co., China's biggest brewer.
A-B's competitors also are moving into China. SABMiller, which makes Pilsner Urquell and Peroni Nastro Azzurro, has been buying companies in China and India to expand. Its China Resources Snow Breweries Co. venture last year beat Tsingtao to become the nation's biggest brewer by sales.
Carlsberg A/S, the Danish brewer planning to invest as much as $880 million in Asia in the next three years, is seeking acquisitions in China's eastern regions to help it expand 15 percent annually in the country, Senior Vice President Jesper Madsen said in November.
From the March 26, 2007, Prepared Foods e-Flash