Anheuser-Busch hopes to sell more Budweiser in China

Development by the textbook. Anheuser-Busch hopes to double the amount of Chinese cities where it sells its Budweiser beer over the next five years from currently 100 in an effort to increase its profits.

According to reports in the media, Anheuser-Busch hopes that more consumers in China, the world’s largest beer market by volume, will switch to Budweiser and other more expensive brands. The Budweiser brand claims only a tiny 2 percent of the overall market in China, but 40 percent of the premium brand segment.

The company also said it would increase distribution and support in China for Corona Extra, the beer made by Mexico’s brewer Modelo, which is half-owned by Anheuser-Busch.

China is a key battleground for rivals such as Anheuser-Busch and SABMiller as the average Chinese downs only 24 litres of beer a year. At the moment, the bulk of beer consumption is standard brands. But Anheuser-Busch thinks that eventually China’s market segmentation will resemble more mature markets where premium brands represent a solid 20 percent of total volume consumed.

Anheuser-Busch, which also counts Danish brewer Carlsberg among its rivals in the country, estimates that Chinese consumption will double within a decade, and is expanding into China’s smaller, county-level, cities.

Beer consumption in China, where a 640 ml bottle can sell for as little as the equivalent of USD 0.12, has more than doubled in the past 10 to 12 years.

Anheuser-Busch also plans to expand its share of the premium segment by introducing brands made specifically for Chinese beer drinkers and by expanding its Harbin premium brand into 33 new markets in 2007.

It plans to integrate Budweiser and Harbin Beer, including marketing, sales and human resources, to help develop the Harbin brand.

The U.S. brewer, which has a 27 percent stake in Tsingtao Brewery, bought the

Wuhan Brewing Co. in 1995 and the Harbin Brewery Group in 2004.