Heineken has big hopes for China beer sales
exceed its own forecast market growth expectations in the next few
years. Indeed, sales of its flagship brand are expected to increase
by 25 per cent next year.
Although Heineken started brewing in China relatively late, its rise has been rapid, in line with strong market growth. The head of Heineken's China business unit, Ric Link, believes that this is only the start.
"We expect the overall Chinese beer market to grow 4-6 per cent in the coming years," he said. "That means the growth will be somewhere between 12-15 million hectoliters... We are growing faster than the market."
Currently Heineken's biggest selling beer in China is Reeb, which is produced through the wholly owned Shanghai Brewery. It has helped the company forge a strong position in the North-west region, but elsewhere the brewer's market coverage has not been so strong.
Added to this pricing pressures have affected the company's flagship brand, which until this year has had to be imported into the country, making it more expensive than local brands.
One way of tackling this problem is for Heineken to start producing its own brand beer in the country, a goal that many of the other international brewers are now racing to achieve. Indeed, the company is starting production of Heineken branded beer at the Guandong Brewery, of which it has a 21 per cent stake.
The move means that Heineken will be able pass on the savings in production and distribution costs to its customers in the all-important Guandong region, which should provide a valuable boost to its branded beer sales in the country.
Currently the company's brand portfolio in the Asia Pacific region includes Tiger Beer in Singapore, Bintang in Indonesia, Reeb in China and Bivina in Vietnam.
China produces more than 24 million tonnes of beer a year, and has now surpassed the US as the world's largest and fastest growing beer market. According to beverage research company, Canadean, beer sales in China rose by 6.3 per cent in 2002, compared to 1.3 per cent in the US and 2.6 per cent in Europe. Canadean anticipates that China's beer market will expand by as much as 5 per cent per annum until 2008, compared with growth of 0.7 per cent for the US and 2.5 per cent for Europe through 2005.
