Anheuser-Busch seeks organic growth

Anheuser-Busch has already invested about USD 1.3 billion in mainland China, the world’s largest beer market by volume, helping it become Anheuser-Busch’s largest overseas market and fastest growing. Anheuser-Busch has a 27 percent stake in Tsingtao Brewery Co. Ltd., China’s largest brewery. It also bought Wuhan Brewing Co. in 1995 and Harbin Brewery Group, the country’s fifth ranking beer company.

Anheuser-Busch’s international business makes up only 5 to 10 percent of the company’s total sales, but it is growing much faster than the U.S. domestic market. Nevertheless, profit margins are still highest in the United States.

According to Anheuser-Busch, the global operating profit per barrel of beer is around USD 8, while the U.S. industry is about triple that, and China is about a fourth of that average.

While a 640 ml bottle in China can sell for as little as USD 0.12, the potential is huge as higher incomes translate into higher rates of beer consumption.

Beer consumption in China has more than doubled in the past 10 to 12 years. Global brands are coming to China in the hope that rising incomes would allow them to eventually sell premium beers with better profits.

The Budweiser brand claims only a 2 percent of the overall market in China, but 40 percent of the premium brand segment.