AB-InBev bets on high-end brands and opens a craft brewery

AB-InBev’s venture capital division ZX Ventures will open a craft brewery in Wuhan, central China, in order to tap into the growing market for premium beers in the country, media reported in early February 2018.

The fact that AB-InBev is placing its bets on an expanding high-end beer segment is not surprising. While China’s beer market has contracted massively over the past few years to the detriment of mainstream brands, the high-end segment grew its market share to slightly over three percent in 2016, according to Kantar, a market research firm.

That’s mostly imported or international beer brands as craft beer only represents less than one percent. Budget-priced lagers, which cost less than USD one per bottle, still comprise about 90 percent of the market.

What is surprising about the announcement is that it will not be AB-InBev controlling the new craft brewery but its venture arm ZX Ventures.

On behalf of AB-InBev, ZX Ventures has been looking after a host of craft breweries from around the world and several other beer-related businesses. Obviously, ZX Ventures enjoys the benefits of a small and agile organisation which better suits the needs of these businesses.

The facility is AB-InBev’s first dedicated craft beer facility in Asia, and will produce craft beers for its Goose Island, Boxing Cat and Kaiba brands.

ZX Ventures chose to set up the brewery in Wuhan because AB-InBev has over 30 years’ experience of selling beer in the city, and they have noticed that consumer preferences have switched from traditional beer to craft beer.

AB-InBev has strengthened its position in the Chinese market over the past few months, as the establishment of the Wuhan facility follows the inauguration of a brewery in Fujian province in December 2017.