BrewDog signs joint venture with Budweiser to expand in China

United Kingdom | Courting controversy, BrewDog has struck a deal with Budweiser China to brew BrewDog’s flagship beers by the end of March at its Putian craft brewery.

In an interview with the Financial Times newspaper, BrewDog’s CEO, James Watt, said on 20 February: “We don’t want to be owned by ‘big beer’ but we do want to become a global beer business.” He added that his company was focusing on international expansion in part because “the environment is very challenging in the UK”.

Sounding very corporate, Mr Watt said in the statement: “We are very excited about further expansion into China. This is a genuinely transformational partnership which is going to bring BrewDog to every corner of the world’s biggest beer market, from a truly bespoke craft brewery which will help ensure the quality of our beers.”

Craft beer is on the rise in China

Hong Kong-listed Budweiser China, which is majority-owned by AB-InBev, will allow BrewDog to use its extensive sales and distribution network to win a portion of the fast-growing market for craft beer.

The benefit to BrewDog is obvious. But why AB-InBev chose to support BrewDog in China, although it has lots of craft beer brands in its own portfolio, not least Goose Island, is anybody’s guess.

Production of craft beers in China stood at 6.5 million hl in 2020, though that volume was dwarfed by more than 341 million hl of beer produced overall in China that year, according to data by hops supplier BarthHaas.

BrewDog has breweries in the US, Germany, and Australia, allowing the UK’s largest craft brewer to get products to customers more quickly while reducing costs and carbon emissions.

Media say that BrewDog has struck a separate deal with an unnamed affiliate of Budweiser China to expand in South Korea, with options to collaborate in other Asian markets. BrewDog has another joint venture in Japan with brewer Asahi since 2021. It hopes to open up to ten bars in China over the next five years, adding to one in Shanghai, which it launched in 2020. The company runs some 110 bars around the world.

BrewDog made a pre-tax loss of GBP 9.4 million (USD 11.3 million) in 2021, the most recent year for which accounts are available, on net revenue of GBP 219 million (USD 264 million).

Hypocrisy, or what?

Nonetheless, BrewDog’s expansion in China could revive claims of hypocrisy. Last year, BrewDog campaigned against FIFA for staging the Football World Cup in Qatar over its record on human rights.

Mark Sabah, of the Committee for Freedom in Hong Kong Foundation, said: “It’s completely hypocritical. You cannot call out an authoritarian regime and support another just because they buy and make your beer. If they are going to be calling out human rights abuses in Qatar, they should be doing the same in China.”