E-Malt.com News article: China: Anheuser-Busch said Jan-Sept 2006 China sales up 20 pct

Anheuser-Busch Cos. Inc., the largest U.S. brewer, said that China sales volume grew 20 percent in the January-September period and that future gains would likely be powered by organic growth, Reuters reported January 29.

Stephen Burrows, chief executive of Anheuser-Busch International, told Reuters in an interview he was satisfied with his base of operations in China even as aggressive rivals gain market share through acquisitions.

“Certainly, it is organic growth in China,” said Burrows, who travels to China about once a month.

The company has invested about $1.3 billion in the mainland, the world's largest beer market by volume, helping it become Anheuser-Busch's largest overseas market and fastest growing.

“When you buy an existing company there are rough spots in that,” he said.

Anheuser-Busch has a 27 percent stake in Tsingtao Brewery Co. Ltd., China's largest beer maker. It also bought Wuhan Brewing Co. in 1995 and Harbin Brewery Group, the country's fifth largest beer maker.

Burrows said he had met most of the brewers in China over the past few years but was not currently in discussions with any of them for any possible acquisition.

“I have met them but that doesn't mean we are trying to acquire them,” he said.

China, the world's largest beer market by volume, is a key battleground for rivals such as Anheuser-Busch and Britain's SABMiller Plc's as the average Chinese downs only 24 litres of beer a year, well below the average American's 80 litres.

SABMiller's venture with China Resources Enterprise Ltd., CR Snow, said earlier this month it plans to buy the leading brewer in the country's southwest for US$320 million, firming its leading position in China.

Anheuser-Busch's international business makes up only 5-10 percent of the company's total sales, but is growing much faster than the U.S. domestic market.

The volume of beer shipments to U.S. wholesalers rose 1.1 percent during the third quarter, lagging far behind the 5.9 percent volume rise in Anheuser-Busch's international unit.

“Through nine months, our (China) business has grown about 20 percent,” he said.

Burrows did not say if he expected that pace of growth to be sustained. He did say he hoped to match industry growth in China of at least 10 percent annually. “There is huge potential in China,” he said.

Burrows said that while growth in emerging markets was faster than the domestic market, profit margins in the U.S. were still the largest for the company in the world.

The global operating profit per barrel of beer is around $8, while the U.S. industry is about triple that, and China is about a fourth of that average, said Burrows. “We believe that the Chinese beer industry will evolve to a higher level of profits, but it will take time,” he said.

While a 640 ml bottle in China can sell for as little as the equivalent of 12 U.S. cents, the potential is huge as higher incomes in the world's fastest growing major economy translate into higher rates of beer consumption. Beer consumption in China has more than doubled in the past 10-12 years, he said.

The 27-year Anheuser-Busch veteran said the Budweiser business in Wuhan was profitable after six years, but said global brands were coming to China in the hope that rising incomes would allow them to eventually sell premium beers with better profits.

The Budweiser brand claims only a tiny 2 percent of the overall market in China, but 40 percent of the premium brand segment, he said.

(US$-7.78 yuan)


31 January, 2007