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HONG
KONG, China (CNN) --
Battling the beer bulge has taken on a new meaning in China where
international brewers, facing saturated markets at home, are racing to tap
into a booming yet glutted market.
China's beer market is
the world's second largest after the United States, and is already the
number one market in Asia for international brands.
"It's grown very fast
over the past few years. A lot of that has to do with consumer spending,
greater demand for the product," says Mark Michelson of Apco Asia.
"But a lot of it has to
do with marketing and distribution as well. And you've also started to see
the beginning of a consolidation in the Chinese beer market," he adds.
In the 1990s, though,
foreign investments in China's beer sector went flat -- startups left
drowning in a sea of cheap local brew.
These days overseas beer
giants, unable to beat domestic brewers' vast sales networks and low
production costs, are buying into some of the largest local players.
Beer deal
Most notably, the
world's biggest beer producer, Anheuser Busch, which has just signed a deal
to increase its stake in China's biggest brewer, Tsingtao, from 4.5 percent
to 27 percent .
Others now looking to
pour money into the China beer market are: South African breweries, Belgium
based Interbrew, and Japan's number two brewer Kirin.
"We've been advising
brewers since 1994 in China. We used to spend so much of our time trying to
help brewers lose less money," comments says
Glen Steinman of Seema
International.
"And in fact now brewers
are able to start making money. The two most active brewers in China, AB and
Sab Miller, are both profitable in China today,"
Still, competition
remains stiff.
"Very, very competitive,
especially if you look at the urban markets, generally there are two or
three entrenched state owned breweries already in place and now you have
national brands like Tsingtao trying to make inroads," says Henry Lee of
Hendale Asia.
But high risks reap high
rewards -- China is expected to overtake the U.S. as the leading beer market
in the world within the next few years. |
