After SABMiller lost a bidding war for China’s Harbin Brewery Group to Anheuser-Busch Coso two years ago, it looked as if America’s King of Beers would reign over the Middle Kingdom as well. Anheuser-Busch, after all, had already sealed a deal with China’s leading brewery, Tsingtao, and with Harbin in its stable it looked unbeatable.
But SABMiller had a Plan B that could well give it the throne after all. Since losing Harbin, London-based SAB has focused its energies on a 12-year-old joint venture, China Resources Snow Breweries Ltd., that is now thriving. In June, CR Snow, which includes 46 breweries across the country, surpassed longtime leader Tsingtao for the No. 1 spot. For the 12 months through June, CR Snow produced nearly 40 million barrels, vs. 37 million for Tsingtao. As a result, CR Snow boasts 14.9% of the Chinese market, compared with Tsingtao’s 13.9%. "Our growth has been on the back of a very consistent and targeted strategy," says Wayne Hall, SABMiller’s finance director in China.
Both companies want to be the toast of China. As beer sales in the U.S. and Western Europe have lost their fizz, they’re growing at 8% — plus annually in China. That has helped China overtake the U.S. as the world’s top beer market.
SAB was early to see the promise of China, where it has been brewing since 1994. Yet instead of targeting big cities such as Shanghai and Beijing, as its competitors did, SABMiller scooped up breweries in less affluent areas, including the northeastern rust belt and the populous inland province of Sichuan. This contrarian strategy has allowed SABMiller to build up a national footprint at bargain prices. While Anheuser ponied up $ 700 million — as much as $ 62 per barrel of annual brewing capacity — for Harbin, SABMilIer has typically paid $ 30 - $ 40 per barrel for its breweries. "SABMiller has made a mint by purposely buying cheaper assets," says Bear, Stearns ＆ Co. analyst Anthony Bucalo.
SABMiller has been smart in its positioning of the flagship Snow brand. To appeal to upwardly mobile youth, it slapped a shiny, modern label on the 50-year-old brew and launched a national ad campaign emphasizing the beer’s freshness, complete with sweepstakes that reward winners with outdoor vacations. The marketing push is paying off as it presses into the big cities. China now accounts for nearly 20% of SABMiller’s total volumes, and Snow has become China’s No. 1 brand. Soon, it will probably surpass Miller Lite as the biggest seller in the company’s cooler. |
What is this article mainly about
A．(A) The bidding war between SABMiller and Anheuser-Busch Cos.
B．(B) China has overtaken the U. S as the top beer market.
C．(C) How SABMiller beats Anheuser in global markets.
D．(D) The success of SABMiller in China.