Anheuser-Busch looks to China

By Neil Merrett

- Last updated on GMT

Related tags Anheuser-busch United states

US brewer Anheuser-Busch is to expand its Chinese distribution
outlets as it looks to offset declining sales growth in its
domestic operations.

The company joins a growing number of brewers who are looking to the dynamic Chinese beer sector to help buoy stagnant markets in Europe and the US. YR Cheng, AB's managing director for China, told that the country has become a highly significant market for the group's global operations. "As the largest-volume and fastest-growing beer market in the world,Chinais the most important market for Anheuser-Busch outside theUnited States,"​ he said. Cheng added that to cater for the demand the company will gradually expand distribution of its brands into the country's county level cities, with each boasting a minimum population of one million people. "Anheuser-Busch will begin expanding to county-level cities in 2007 with the expansion being completed over the next five years,"​ he said. "In addition to Budweiser, Anheuser-Busch will continue to introduceHarbinpremium brands into 33 new markets this year." ​ Along with increasing its position in the country, Anheuser-Busch added that it was also working to increase the profitability of its brands.​ In particular, the company believes it is finding success in encouraging the country's consumers to switch their palettes to the group's more premium brands. "We've been committed to a strategy of developing a profitable business inChina, and we've been successful,"​ added Cheng. "That sets us apart from other international brewers." ​ The move could prove to be prudent for Anheuser-Busch, which had a moderate profit growth of 3.1 per cent in its key US market during 2006. Howver, the company is not the only major brewer to take notice of the opportunities in the country. In its latest third quarter results rival SABMiller announced that emerging markets like China had helped the group overcome disappointing performances of its brands within North America and South Africa. ​ Beer sales growth of more than 30 per cent in China during the quarter reflected SABMiller's determination to out-gun rival brewers through its joint venture there, China Resources Snow Breweries. After the initial gold rush, the race is now on in China to build a truly national beer brand, and Cheng is confident that Anheuser-Busch is in a strong position to do it. "WhileChinaremains a challenging market, we believe Anheuser-Busch has the right combination of product quality and taste, brand positioning, and long-term commitment to continue our success,"​ he added.

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