China: Anheuser-Busch plans a double expansion of Budweiser sales in China

Anheuser-Busch Cos. Inc., the largest U.S. beer maker, said it plans to double the amount of Chinese cities where it sells its Budweiser beer over the next five years from 100 now, citing "huge" growth potential in the country, Reuters communicated on March 16.

Anheuser-Busch hopes that more consumers in China, the world's largest beer market by volume, will switch to Budweiser and other more expensive brands, boosting the firm's presence in the more profitable premium segment, its country head said.

"A-B thinks the growth potential of the Chinese premium beer market is huge," YR Cheng, managing director of Anheuser-Busch Greater China, was quoted in an emailed statement as saying. "We believe more and more Chinese consumers are able to, and want to, enjoy higher-quality beer."

The Budweiser brand claims only a tiny 2 percent of the overall market in China, but 40 percent of the premium brand segment, according to the U.S. brewer.

The company said it would increase distribution and support in China for Corona, the beer made by Mexico's Modelo, in which Anheuser-Busch holds half of the shares.

China is a key battleground for rivals such as Anheuser-Busch and Britain's SABMiller Plc's (SAB.L) as the average Chinese downs only 24 liters of beer a year, well below the average American's 80 liters.

Anheuser-Busch, which also counts Danish brewer Carlsberg among its rivals in the country, however estimates that Chinese consumption will double within a decade, and is expanding into China's smaller, county-level, cities.

Beer consumption in China, where a 640 ml bottle can sell for as little as the equivalent of 12 U.S. cents, has more than doubled in the past 10-12 years, Budweiser says.

Anheuser-Busch also plans to expand its share of the premium segment by introducing brands made specifically for Chinese beer drinkers and by expanding its Harbin premium brands into 33 new markets in 2007, it said.

It plans to integrate Budweiser and Harbin Beer, including marketing, sales and human resources, to help develop the Harbin brand.

The U.S. brewer, which has a 27-percent stake in Tsingtao Brewery Co. Ltd., China's largest beer maker, in 1995 bought Wuhan Brewing Co. in 1995 and Harbin Brewery Group, the country's fifth-largest beer maker.

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