E-Malt.com News article: 2832

China: SABMiller, the world's second-largest beer group, has vowed to unleash "aggressive competition" against Anheuser-Busch in China after losing to its arch-rival in the takeover battle for Harbin Brewery, Financial Times posted on June 24 2004. André Parker, SABMiller's Asia managing director, said China Resources Breweries, a joint venture with the state conglomerate China Resources, would launch a marketing blitz and possibly trim prices in Harbin's stronghold in north-east China.

"There will be aggressive competition," Mr Parker told the Financial Times. "We will fiercely defend our turf . . . We are looking for market share and a dominant position in the domestic market." SABMiller's moves will open another front in its global battle with Anheuser, which earlier this month outmanoeuvred its rival to buy Harbin - China's fourth-largest brewer - with a $717m bid.

The tussle between the world's two largest brewers in China is a sign of the increasing competition among multinationals vying to win a share of the world's largest consumer market. Mr Parker dismissed suggestions SABMiller - a former partner of Harbin - would use the $124m profit it made by selling its 29 per cent stake in Harbin to Anheuser to introduce large price cuts in the north-east, saying only that his company would react if Harbin moved first.

However, people close to SABMiller said that, although discounts would reduce the brewers' already slim margins, price would be a factor in any offensive against Harbin. The main thrust of CRB's efforts in the north-east would be to increase marketing spend on its key brands such as Snowflake. Promotions, such as competitions and prizes, would also be part of the offensive by CRB, whose share of the north-eastern beer market is about 30 per cent, similar to Harbin's.

The strategy is an innovation for the China beer market, where consumers have traditionally been driven by price. SABMiller's plans for a more aggressive approach to the north-east market - China's thirstiest - could threaten profits at Harbin Brewery, which earlier this year moved to widen its margins by raising prices.

Anheuser declined to comment.


25 June, 2004