E-Malt.com News article: China: World’s most popular beer, Snow is hardly ever known of outside China

Belgium-based Anheuser-Busch InBev is the world's largest brewer. And its top brand isn't Budweiser - it's actually Bud Light. Even so, Bud Light is only the world's second-most popular beer, Street Authority posted on August, 2.

The correct answer is a product some people haven’t ever heard of - Snow beer, the most popular beer in China.

Snow is a product of China Resources Snow Breweries, a joint venture owned by U.K.-based SABMiller and Chinese conglomerate China Resources Enterprise.

Snow is estimated to control 5% of the global beer market by sales volume, more than both Bud Light and Budweiser combined. Five percent may not sound like much, but it comes to more than 17 billion bottles of beer a year.

In the past few months, companies that produce alcohol have been on a tear. Thanks to global economic concerns, investors have flocked to this stable corner of the market. Of course, this is nothing new. Defensive stocks tend to do well in a volatile market.

But what most people don't realize is that some of the world's best defensive stocks aren't based in the United States.

As disposable income and middle classes expand in China and other emerging markets, so does demand for goods and services, including alcohol and tobacco products.

In the case of beer, China is by far the largest beer market in the world, more than twice the size of the United States, the world's No. 2, with 6.3 billion gallons in annual sales.

And while sales languish in the United States (down 1% in 2011, according to the Brewers Association, a trade group) and much of the West, sales are on the rise in China and other emerging-market countries - and they have plenty of room to run.

On a per-capita basis, Chinese consumers drink just a little more than 37 litres of beer per year, compared with 77 litres in the United States, 72 in Brazil and 115 for Germany.

That's good news for SABMiller, the world's second-largest brewer.

In the fiscal year ending March 31, more than three-fourths of SABMiller's earnings before interest, taxes depreciation and amortization (EBITDA) came from emerging markets.

About a third of SABMiller's EBITDA originated in Latin America, and the company had the strongest position of any brewer in the fast-growing African market. Of course, it also owns a large stake in the world's most-popular beer, Snow. All told, SABMiller owns more than 200 individual beer brands.

Better yet, since the start of June the shares are up 21%.


03 August, 2012