E-Malt.com News article: 3932

China: In 2003, China overtook the United States to become the No. 1 beer-consuming nation, guzzling an estimated 6.5 billion gallons. Worldwide, beer sales are increasing at between 1% and 2% a year, but the figure is closer to 8% for China, Steve Burrows, chief executive and president of Anheuser-Busch International Inc. said.

That's why Anheuser-Busch spent US$139 million in 2004 to buy Harbin Brewery Group, China's fourth-largest beer producer, and agreed to be a corporate sponsor for the 2008 Olympics in Beijing. Burrows said the company entered China more than a decade ago but only began eking out a profit in 2000.

As with other products, the beer market in China is highly dispersed and cutthroat. There are no national breweries and only a handful of provincial players. Instead, some 400 small beer operations, run mostly by the government, account for 90% of the beer sold in the country, Burrows said.

"While the Chinese beer industry is the biggest in the world, it's one of the lowest in unit profitability," he said.

Burrows and others are counting on China to keep up its rapid economic growth, thus creating more wealth and greater demand for consumer goods. Disposable income in China's urban areas crossed $1,000 per person in 2003, climbing 9%, right in line with growth in the nation's gross domestic product. Rural residents, who make up roughly 60% of China's population, on average had less than $320 to spend or save after taxes in 2003.


05 January, 2005