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China, Shanghai: China's south-eastern Fujian's leading beer makers are aiming to expand their business in the neighboring Jiangxi Province. The Sedrin Beer Group is constructing a plant capable of producing 100,000 tons of beer in Nanchang, the capital city of Jiangxi Province, Interfax-China revealed on November 15. The Yanjing Huiquan Beer Group has invested RMB 128.7 mln (USD 15.55 mln) to establish a 100,000 ton plant in Fuzhou city, Jiangxi. Company officials told Interfax that expanding in nearby regions was the safest strategy in a market characterized by strong attachment to local brands.

An official with the marketing department of the Sedrin Beer Group surnamed Li told Interfax, "We chose Jiangxi as one of our production bases mainly because of the tax benefits the provincial government offered. Additionally, so far the beer market in Jiangxi has not yet been carved up. We must take quick action in order to grab as much of the market as possible. Last but not the least, Jiangxi is on the northwestern border of Fujian, which made the decision less risky than choosing a more distant province, such as the northeastern province of Heilongjiang."

When asked about Sedrin's mid and long-term marketing plan, Li said, "So far we do not have plans to expand nationwide. Currently our marketing strategy focuses in Fujian and secondarily in Jiangxi and Zhejiang. We have little market share in other places. We aim to protect our market share in the Fujian market and increase our share in Fujian, Jiangxi, and Zhejiang gradually. We are not in a hurry to enlarge our business in other places, especially more distant provinces."

He further explained, " Beer consumers generally think highly of local beer brands, even including some very small factories with out-of-date equipment and terrible production environment, and look down on produced by the companies in other places. As far as I am concerned, the nationally famous Qingdao Beer, which entered into Fujian in 2001, has much less market share than us in Fujian, though, fairly speaking, their product quality is good. However, the beer sector is greatly affected by consumers' stubborn psychology. People would always choose local beer whose flavor they are used to. Even if some of the local customers like Qingdao Beer's flavor, they do not think the Qingdao brand beer produced in Fujian does not have the same flavor with the products made in Qingdao." He continued, "Seeing that the much larger Qingdao group has not entirely succeeded in expanding in Fujian, we will develop prudently and not overextend ourselves with a rapid expansion."

Fujian's beer output will reach approximately 1.5 million tons, of which around 500,000 tons are produced by Sedrin, most of which are mid and high- end products, according to Li.

Li said, "Yanjing and Huiquan's combination is a successful example of nationwide marketing in the beer sector, which often is marked by strong localism. Yanjing did not remove the Huiquan brand from the local market, but instead promoted the brand, and provided state-of-the-art technology together with administration methods, and optimized the financial structure. Thus Yanjing's strengths sell well in the locally accepted Huiquan beer bottles." Along with Yanjing, the Qingdao Beer Group and the China Resources Beer Co., Ltd are the three largest beer groups in China, according to Interfax-China.

The Beijing headquartered Yanjing Beer Group, one of the largest three beer conglomerates in China, acquired 39.15% of the Fujian Huiquan Beer Group on March 31 this year. It became a 52.37% shareholder the Yanjing Huiquan Beer Group in October. The Group's quarter two profit this year surged by 912.51% year on year. One of the directors of the Yanjing Huiquan Beer Group surnamed Li told Interfax, "We have gotten rid of the deficits we used to experience before Yanjing came. Now we do everything possible to explore new markets outside Fujian, such as Jiangxi."


17 November, 2004