China Beer Industry

Big Beer Makers Vie for Chinese Brewers

Nov 20, 2009 Chen Nanyang

The world's big brewers are circling Chinese beer companies such as Tsingtao Beer and Snow Beer.

China has become the biggest beer producer in the world since 2003. In 2008 its beer output reached 41.0309 million kiloliters, accounting for 23% of the total output (179.37 million kiloliters) in the world. The increase in 2008 was 5.5%, compared to the 13.8% in 2007.

China Beer Plants

In the last few years, the numbers of beer factories remained at around 510 in China. But the total numbers of the beer companies kept decreasing. The scales of big beer companies increased as results of purchase and merger. Mid-size beer companies disappeared. Small beer companies remained at the same scales, for they are supported by the local market.

Promising Beer Market

The beer consumption in the Chinese market was 27 liters per capita per year in 2008, much smaller than the 100+ liters in developed countries such as Germany and the United States. In the West-China provinces and the rural areas, the consumptions were only, respectively, 15 liters and 10 liters per capita per year.

The Compound Annual Growth Rate (CAGR) of China’s beer output was 10.2% between 1991 and 2007, much bigger than the 2.66% of the global beer industry.

The 4 biggest Chinese beer brewers are Snow Beer, Tsingtao Beer, Yanjing Beer, and Harbin Beer. In China the thirst for beer is rising along with incomes, so buying local brewers is a lip-smacking prospect to big international beer brewers.

Anheuser-Busch InBev, the world’s biggest beer brewer, had 27% stakes of the Tsingtao Beer, becoming the second biggest stakeholder of the latter. In January 2009 Anheuser-Busch InBev sold 19.9% stakes to Asahi Beer, the biggest Japanese beer brewer. Asahi Beer becomes the second biggest stakeholder of Tsingtao Beer. By now Anheuser-Busch InBev has more than 30 beer plants in China.

South African Breweries Plc (SAB), the world's second largest brewer, has become the biggest stakeholder of the Harbin Beer, China’s fourth biggest beer company, since 2004.

SAB is also the second biggest stakeholder of the Snow Beer, the biggest Chinese beer brewer. It holds 49% stakes.

Beer Premiumisation Under Way

In China, premium beers have yet to catch on, presenting another potential opportunity for brewing giants as they compete across the world. But the trend of premiumisation was slow down in the past year due to the impact from the economic setback.

Sources: This analysis is based on latest statistics from the Beer Branch of the China Alcoholic Drinks Industry Association, China Customs, and the National Bureau of Statistics of People’s Republic of China as of the date of article publication.

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Tsingtao Beer