Category Archives: Anheuser-Busch InBev

AB InBev buys Nanchang Asia Brewery in latest China acquisition

Source: Want China Times

Anheuser-Busch InBev has struck a deal to acquire Nanchang Asia Brewery to help it tap into middle and low-end markets in China, a source from the Belgium-based beer company has told the Chinese-language National Business Daily. Continue reading

Anheuser-Busch InBev reports Third Quarter 2012 and Nine Months 2012 Results- China

Source: Anheuser-Busch InBev

Volumes: Beer volume grew by 2.2% in China in 3Q12, with cold and wet weather at the start of the quarter impacting the industry in our regional strongholds of the north east and south east of the country. Volumes are ahead by 4.3% in 9M12. We estimate that we gained 20 bp of market share in the first eight months of the year for which data is available Continue reading

This Bud’s For You, China: The Fall of Budweiser as a U.S. Brand

Source: The Atlantic by Jordan Weissmann

When does an American brand stop being a brand for Americans? Continue reading

Anheuser-Busch InBev reports Second Quarter 2012 and First Half 2012 Results

Source:   Anheuser-Busch InBev

Anheuser-Busch InBev reports second quarter 2012 and first half 2012 results (July 31, 2012)-China Highlights

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Changes Brew in Asian Beer Sector

Source: Wall Street Journal By Kathy Chu and Mike Esterl

HONG KONG—The burgeoning beer industry in Asia is likely to undergo significant changes this week, when a decision is expected to be made regarding Heineken NV’s US$4.1 billion bid for one of the region’s prized assets.
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Anheuser-Busch fined for illegal brewing in China

Source: Want China Times

A Hunan branch of Belgian-Brazilian brewing conglomerate Anheuser-Busch InBev in has been fined after it was revealed that it had been selling its products without a license for four months, reports Shanghai’s First Financial Daily.
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Bars kick into high gear for soccer gala

Source: By Han Bingbin in Beijing, Gao Changxin and Tang Zhihao in Shanghai (China Daily)

A sultry Friday night seems a perfect time for soccer fans to relax in a bar and watch the European Championship.

At Salitun’s Boys and Girls Bar, waiter Fu Xiaoliang said people passing by have been asking whether they will broadcast the game live.

Many of the other establishments along Beijing’s most dynamic bar street have set up huge projection screens and made room for additional seats.

At Furen Bar in Houhai, another bar area in Beijing, three projection screens have been set up inside and one outside. The TVs were already on the China Central Television sports channel, where preliminary reports of the games were setting the atmosphere. The 2 am closing time has been pushed back, and wine discounts and free fruits and snacks will be offered during the nearly month-long tournament that starts on Saturday, Beijing time.

Bar owners are obviously hoping to attract more soccer fans. Waiter Xiao Chen at Sanlitun’s No 60 Pizza expects to triple their normal daily sales on Friday night.

Guo Jinchao at Furen doesn’t set much store in opening day, since he believes the number of spectators will depend heavily on “whether strong and famous teams are playing”. He thinks the real rush will come after the quarterfinals. During previous international tournaments such as the World Cup, Guo said, seats for games from the quarterfinals onward would usually be booked days in advance.

During the week, the time difference with Europe might pose a problem as all the games kick off at midnight or later, Beijing time.

But hardcore fans will find ways to tackle the problem.

According to Wang Wen, president of the Beijing Soccer Fans Association, some people will take their annual leave or ask for some days off during international soccer tournaments like the World Cup and the European Championship. Others may choose to change their routines, for example, going to bed around 8 pm, getting up to watch games around 3 am and preparing for work after the game.

Heady time for beer

Some beer producers are also busy during the tournament, and flags from Danish brewer Carlsberg — the official partner of the European Football Championship for 24 years — flutter along Sanlitun’s bar street.

The company plans to introduce a new product into the Chinese market during the event and is also sponsoring Chinese fans to watch games in person in Ukraine.

But some brands have chosen to stay low-key during the tournament, putting their focus on other fields.

China Resources Snow Brewery, which invested more than 80 million yuan ($12.5 million) just in television commercials during the 2010 FIFA World Cup, featured a photo contest on its website.

Budweiser is busying sponsoring concerts and Harbin Brewery, an official partner of the 2010 FIFA World Cup, has committed itself to the National Basketball Association playoffs.

Tsingtao Brewery has set its eyes on the London Olympic Games in August, sponsoring a TV reality show that selects cheerleaders for the Olympics.

Could it be that Carlsberg’s official status has scared off the competition? Not necessarily, said Li Bingyang, a beer industry analyst with Adfaith Management Consulting.

Being an official partner certainly gives a company an edge in marketing, he said, but that doesn’t prevent other players from taking part.

In fact, it is a common practice for many breweries to make an appearance at the same event, he added.

“The reason breweries snubbed the European Championship this year is that the competitive landscape in China’s beer industry has changed over the past few years,” Li said.

AB InBev, the world’s biggest brewer that owns 14 beer brands including Budweiser, spent millions to promote Harbin Brewery during the 2010 World Cup, after buying the Chinese beer maker in 2004. But sales growth fell short of expectations, said Li, adding AB InBev has changed its marketing strategy in China since then.

“The era has come where marketing will target more and more specific customer segments. So big sports meets such as the European Championship will be of less importance for brewers,” Li said.

China JVs hold back revenue – Anheuser-Busch InBev CEO

Source: Just-Drinks By Andy Morton | Photo: China Daily

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.

Budweiser Is Luxury in China Where Beer Costs 30 Cents

Source: Bloomberg News

Cheap beer.  For consumers in China, it’s a fact of life. Brew in China, the world’s biggest market, sells at one-third the price in the U.S. Now foreign brewers are wooing the Chinese to pay more for brands that are popular worldwide.

The idea is to get increasingly affluent Chinese (CHHH1) to switch from local beers that sell for as little as 1.87 yuan (30 cents) for a 330-milliliter bottle to foreign lagers such as Budweiser, which costs about 6.13 yuan. To achieve that, overseas companies are acquiring or setting up new breweries across the country to widen the reach for their premium brands.

The four biggest players — China Resources Enterprise Ltd. (291), the partner of SABMiller Plc (SAB), Anheuser-Busch InBev NV (ABI), Tsingtao Brewery Co. (168), which partners Asahi Group Holdings Ltd. (2502); and Beijing Yanjing Brewery Co. (000729) — already account for 59 percent of the beer sold, according to Euromonitor International. They have gained market share as they increased scale. Now they want to boost profitability in the 360 billion yuan market.

“Consuming foreign premium beer has become more and more popular, especially among youngsters who have higher education, higher income and higher acceptance of exotic goods,” said Olive Xia, an analyst with Core Pacific-Yamaichi International Ltd. in Shanghai.

In 2011, consumption of beer rose 4.8 percent to 47.5 billion liters in China. That’s estimated to reach 61.4 billion liters in 2016, with sales growth of premium and standard lagers set to outpace economy brews, according to London-based Euromonitor.

Low Consumption

Chinese drink about 35 liters of beer a year. That is less than half the consumption in the U.S. and a third of that in Germany.

Overseas beermakers entered China initially through partnerships with local companies. London-based SABMiller formed a joint venture with China Resources in 1994 and then bought rivals and set up new plants, according to the company’s website. AB InBev entered China in 1984 by providing technology transfers to Zhujiang Brewery in Guangzhou and from 1998 started forming partnerships, according to its website.

Leuven, Belgium-based AB InBev, which in January added to two purchases it made last year, will increase China sales by boosting volumes of its premium brands including Budweiser, and expand geographically through acquisitions and new plants, Karen Couck, a company spokeswoman, said.

Gaining Share

“We estimate that we gained share during 2011, with our premiumization strategy leading to a favorable brand mix and growth in net revenue,” said Couck. “The premiumization trend continues with double-digit growth and Budweiser is further consolidating its leading position within this segment.”

Budweiser’s market share in China rose to 1.2 percent in 2011 from 1 percent in 2008, according to Euromonitor data. Share of Double Deer, a local brand InBev acquired, fell to 0.6 percent from 0.9 percent in the period.

Brewers are making their packaging more attractive to win higher-spending customers. Budweiser started selling in cans topped with a gold-colored aluminum foil to protect the lid from dust and give it a premium image.

Foreign beermakers put a lot of effort in promoting their brew at restaurants and bars, said Doreen Wang, head of branding at WPP Plc (WPP)’s Millward Brown.

“On the bar streets, you see more Budweiser and Carlsberg logo shops,” Wang said. “Premium beer is mainly for gatherings of friends and family. On these occasions, consumers are willing to pay more on brands that would give them status.”

Carlsberg A/S (CARLA), which is organizing an event in Beijing next week to unveil a new premium product, said its 2011 sales in China outpaced that of the industry, helped by its premium portfolio.

Price to Rise

Tokyo-based Asahi Group, which entered China in 1994 and in 2009 bought a stake in Tsingtao, plans to support local partners to compete at the lower end and itself focus on the premium segment.

“As the market matures, the price will go up, and profit will expand,” said Takayuki Tanaka, an Asahi Group spokesman.

The average retail price of beer in China was 7.6 yuan ($1.2) per liter last year, compared with $3.7 in the U.S., 687 yen ($8.4) in Japan and 2.9 euros ($3.8) in Germany, according to data from Euromonitor.

The Japanese brewer will widen its reach in restaurants in Shanghai, Beijing and the Pearl River Delta areas, Tanaka said. It’s also counting on consumption patterns to change.

“Diversification of preference for beer and how people drink beer will proceed further,” said Tanaka. “And suggestions such as how to drink beer more delectably will be positive factors.”

Pay More

On a recent evening, Lu Yizhi, 32, a tour guide, was watching the UEFA Champions League soccer game between AC Milan and FC Barcelona with friends at a sports bar in central Shanghai.

“I like the heavy taste of imported beer, especially the European ones,” said Lu, sipping a mug of Heineken. “I don’t mind paying a few yuan more.”

Consumers such as Lu have seen incomes rising as China’s economy has on average expanded 10.5 percent in the past five years, prompting intense competition among overseas brewers to acquire and grow.

In the past two years, Chinese breweries were the fourth most targeted by buyers worldwide, according to data compiled by Bloomberg. The 18 brewery acquisitions in China, including AB InBev’s purchase of Dalian Daxue Beer Co., totaled $1.7 billion in the two years through April 9, compared with 39 deals valued at $1.5 billion in the previous two years, the data shows.

“In the next five years, we’ll see more consolidation in the sector with industry leaders stepping up acquisitions,” said Li Yun, an analyst at Guodu Securities Co. in Beijing.

Bid for Kingway

AB InBev, Yanjing Brewery and China Resources Snow Brewery Co., SABMiller’s local joint venture, have been invited to make a final offer as early as mid-April to buy six breweries owned by Kingway Brewery Holdings Ltd. (124), controlled by the Guangdong provincial government, two people with knowledge of the matter said in March.

Kingway’s profit fell 4.1 percent last year amid rising competition and higher production costs. Its profit margin in 2011 was 1.98 percent, compared with AB InBev’s 15 percent and Yanjing Brewery’s 8.4 percent, according to data compiled by Bloomberg.

There is room to raise prices of Snow this year and the company’s average selling price could improve as it shifts focus to more premium beer, Frank Lai, chief financial officer of China Resources, said last month. Snow, China’s largest selling brew made by China Resources and partner SABMiller, had a 19.9 percent share last year, according to Euromonitor.

Slowdown Impact

Still, the slowing pace of economic expansion in China may damp consumer demand. China’s Premier Wen Jiabao has set an economic growth target of 7.5 percent this year, the lowest goal since 2004.

“If China’s economy is trending downward this year and next, high-end beer may see sales drop more than local ones as people might be tightening their belt on discretionary goods,” said Jason Yuan, an analyst at UOB Kay Hian in Shanghai.

Beermakers such as Japan’s Kirin Holdings Co. (2503) said there is price competition in the main segment and it will increase profitability by deploying brands such as Ichiban Shibori in the premium segment, Kan Yamamoto, a spokesman, said.

They should be encouraged by consumers such as Lu.

“The first time I drank a foreign beer was about 10 years ago and it was expensive for me at that time,” said Lu, as he watched the soccer game projected on a large screen. “Nowadays, I make more money. Why don’t I treat myself better?”

Premium Beers Reach Dizzying Heights’

Source: By Li Fangfang (China Daily)

As bottles of premier beer continue to fly off the shelves in China, from family eateries to trendy night spots, industry insiders say it’s happy hour all year round for brewers.

The country is already the largest producer and consumer of beer. Last year it had an output of about 48.99 million kiloliters, a 9.3 percent increase on 2010 and the eighth consecutive year of growth.

Yet, more importantly, the Chinese masses are increasingly filling their glasses with pricey premium brands, including Carlsberg, Budweiser, Bud Light, Heineken and Skol.

The sector may have made up just 10 percent of overall sales in 2011 (a rise of 20 percent on the previous year), but it contributed almost 50 percent of total profit.

Euromonitor, the British-based research firm, predicts the value of China’s beer industry will reach 457.9 billion yuan ($72.68 billion) by 2014, compared with 305.3 billion yuan in 2009.

“China consumes around 43.8 million kiloliters of beer every year,” roughly one-fourth of the world’s total, according to Stephen Maher, chief executive officer of Carlsberg China.

However, the market has some unique traits, he explained: “Research shows Chinese tend to drink beer more often at restaurants, bars and other entertainment venues, and they like to consume large volumes over a short period of time.

“It (the market) is a challenge and an opportunity, as we have to be constantly on our toes and come up with new brands that can connect with the aspirations of consumers,” he said.

Carlsberg, a Danish brewer, has gained lots of local insight during its time in the market, such as the fact that people on the Chinese mainland prefer less bitter flavors, which is different from those in Hong Kong or Malaysia.

“We launched Carlsberg Chill and Carlsberg Light exclusively for customers in China,” Maher said. “These beers are ideal for Chinese drinkers, unlike our flagship ‘green label’ brand, which is a classical European beer with a higher bitterness level.

“Chill is positioned for those seeking entertainment, and Light is for enjoyable moments. Both have well complemented our strategy of creating tailor-made beer products for Chinese consumers,” he said, adding: “Connecting with consumers is core to Carlsberg’s success.”

Carlsberg has also benefited a great deal from its partnership with Chinese brands, including Wusu, Dali, Shancheng and Xixia.

The company owns more than 30 breweries in 11 provinces and autonomous regions, and in particular has been gaining a strong position in western regions of China since the early 2000s.

“Local brands and partners have helped establish a firm base for Carlsberg and provided better consumer insight,” Maher said, adding that his company intends to nurture people’s loyalty to products by retaining local brands and flavors.

In addition, Belgium-based brewer Anheuser-Busch InBev launched in November began producing its high-end brand Stella Artois in China, said John Hsu, its president of BU North Business. The company also makes Beck’s, Budweiser, Corona and Harbin in China.

Wang Renrong, vice-president in Asia-Pacific for AB InBev, said he believes the Chinese market will contribute 30 to 50 percent to the growth potential of the world’s beer industry in the next few years.

He also said China has been one of AB InBev’s most important markets, accounting for 12 to 13 percent of its total business. “We hope the figure will be bigger, as we see huge potential here,” Wang added.

Stella Artois retails at 40 yuan for a 330-milliliter bottle in the market, while most beers are priced under 10 yuan.

Fashion trend

Along with a spike in consumption, there has also been a marked change in the customers’ perceptions, Maher said.

With disposable income on the rise, beer has slowly made inroads in the high-end sector, traditionally dominated by wine and spirits.

Drinking premium beer is now fashionable among affluent, middle-income families as well as younger generations, Maher said.

“There is high profitability in the premium beer segment,” he said. “Premium beer will account for 25 percent of China’s annual beer capacity over the next five to 10 years. This is good for us, as we have always been strong in the premium segment.

“As consumers move up, they’re moving into our playground,” he added.

“From the Chinese perspective, what we are trying to do is to say that beer has a role to play in Chinese celebrations.”

Carlsberg has already had more than 20 brands targeting Chinese drinkers, although Maher conceded that companies need to get ahead of the trend if they want to make it big in the Middle Kingdom.

“The market has become more demanding, and the fast-changing landscape means that the one with the ear closest to customer preference clearly walks away with the crown,” he added.

Finding partners

After dominating the premium beer sector in China, foreign brewers are turning their attention to low-end customers through acquisitions.

Beijing Yanjing Brewery Co Ltd, the only Chinese brewery without an overseas partner, has looked on as Western rivals have teamed up with companies in second- and third-tier cities.

Based in the capital, and with 42 branches in 18 cities, Yanjing is already one of top-three beer producers in China, and it aims to be one of the world’s top-six brewers by 2015.

To achieve the goal, the company needs to add 3 million kiloliters to boost its annual output to 8 million kiloliters.

Huang Fusheng, an analyst at China Securities, said that over the next five years the competition in the country’s beer market is expected to become more intense, as the brewers will seize opportunities in mergers and acquisitions.