AB InBev brews strategy for expansion

By Chen Qide (China Daily)
Updated: 2010-11-03 07:48
Large Medium Small

SHANGHAI - Global brewing giant Anheuser-Busch InBev will launch an estimated 300-million yuan ($44.84 million) project in Henan province for the production of its Harbin Beer brand as part of an expansion strategy within the Chinese market.

An agreement is expected to be signed with Xinxiang, Henan province, this month, where a new brewery will be constructed. The facility will have an annual production capacity of 200,000 tons of Harbin Beer in its first phase.

The project is the third step in AB InBev's more than 1 billion yuan three-stage investment program for this year.

The company aims to transform the regional beer brand into one of national importance, said Miguel Patricio, president of Shanghai-based Anheuser-Busch InBev APAC.

Harbin, founded in 1900, is China's earliest beer brand, and produced 1.7 million tons in 2009 to take 66 percent of the market share in Harbin, Heilongjiang province, and 5 percent of the national market.

"It (the market share) is not enough for the huge Chinese market, which represents about 30 percent of the growth of the global brewing industry," said Patricio.

To reach its expansion goal, AB InBev has pushed forward its investment scheme and launched its first project in Ziyang, Sichuan province, in April, establishing a production base with an investment of 650 million yuan.

The project, which will produce 300,000 tons of Budweiser and Harbin annually in its first phase, is scheduled to begin operations in June 2011.

The new brewery, covering an area of 136,000 square meters, will ultimately reach a production capacity of 1 million tons annually when its second and third phases are completed.

"The Sichuan base will not only serve the province itself, but also the entire Southwestern region including Yunnan and Guizhou provinces, Chongqing municipality, and the Tibet autonomous region," he said.

AB InBev also signed an agreement with Zhangzhou, Fujian province in August to build a 450 million yuan brewery to produce 300,000 tons of beer annually.

"Launching three projects within one year is a symbol of our strong confidence and long-term commitment to China," Patricio said.

"My confidence in these projects is based on the country's positive environment for investment," he said.

Rex Wong, vice-president marketing of Asia Pacific AB InBev China, said the brewery's strategy of turning Harbin Beer into a national brand was stimulated by its promotion campaign at the FIFA World Cup in South Africa.

"The next step for AB InBev is to further improve its nationwide network linked by the breweries at different places in China," Wong said.

China Daily