China: Beer output hit 12.41 million liters in the first five months of 2006, pure draft segment increasing

With the upcoming Beijing Olympics, many Chinese beer producers have gradually launched their Olympic-related marketing strategies. In August 2005, both Tsingtao Beer and Yanjing Beer successively signed Olympic Sponsorship agreements with the Beijing Olympic Games Organizing Committee to become the official domestic beer sponsors for the Beijing Olympic Games. As Budweiser has signed agreement with the International Olympic Committee, there are now three official beer sponsors for the Beijing Olympic Games, China Economic Net released August 01.

On June 6, 2006, Tsingtao Beer formally launched its 3-year Olympic marketing plan: promoting a "whole nation Olympic" concept in the next 2-3 years and adopting the marketing model integrating brand promotion, sales and experience. On the same day, Yanjing Beer announced the overall initiation of its Olympic marketing strategies. Yanjing Beer advocates "moving the world, surpassing the dream" in brand promotion, and its new slogan launched in a high tone is "New Beijing, New Olympics and New Yanjing". China Resources Beer, which failed to become an Olympic Sponsor, has taken a different marketing strategy targeted at beer fans so as to offer supports for beer consumers who are the audience of the Olympic Games.

In July, beer sellers have benefited considerably from their beer sales. According to Du Lvjun, a deputy general-secretary of the China Alcoholic Drinks Industry Association, China's beer output hit 12.41 million liters in the first five months, up 15.4 percent year on year; revenues from beer sales was RMB30.38 billion yuan, up 17.7 percent year on year; and both the total profits and taxes have somehow increased. "As the World Cup was held this year and July and August is the best selling season, I think that the beer output of this year will increase by over 5 percent on a year-on-year basis."

China, with a beer production history of over 100 year, is characterized by a single product variety and its production of light-taste ordinary beer, but there lacks beer and alcoholic drinks targeted at female consumers. Generally speaking, female consumers prefer fruit-flavored beers to bitter, strong liquids. In recent years, with women's social activities increasing, fruit-flavor beers with low alcohol content have gained a conspicuous advantage in the market. The large domestic beer producers have begun to attach importance to this emerging market. Tsingtao Beer, Yanjing Beer and Harbin Beer all have launched this type of product, with a range of flavors including pineapple.

There have emerged more and more kinds of pure draft beer in the market. Since its first debut in the Japanese market, the pure draft beer has demonstrated a rapid growing trend. Pure draft beer differs greatly from beer made with the conventional method in raw material, production technique and equipment, so its production costs are also relatively higher. For example, the expenditures on the testing of pure draft beers are 20 times higher than those on the testing of an ordinary beer. With the improvement of its production techniques, pure draft beer producers have increased in number, and its price is acceptable to more ordinary consumers.

More and more beers with the words "pure draft" printed in the brand appear in the supermarkets. In a Huaqiang Supermarket, a 335-ml can of Pure Draft Beer with Tsingtao, Yangjing or Beijing brands sells for RMB3 yuan while a can of ordinary beer sell for RMB2 yuan. Though the former is a bit more expensive, consumers think the price is acceptable and buyers are many. Mr. Liu, a company employee, bought a box of Yanjing Pure Draft Beer. "I often drink beer. I feel that pure draft beer has a better taste, and it is also not as expensive as before now." Mr. Liu said.

With a higher price, the pure draft beer has brought more profits to the beer producers. Since Zhujiang Beer built the first pure draft beer line in China in 1988, many beer producers followed suit. Yangjing Beer invested RMB136 million yuan to introduce a 100,000-ton production line of draft beer from Germany, which is the first pure draft beer line in North China. With the enlarged capacity, the price of pure draft beer is becoming affordable to ordinary consumers. In 2005, China Resources Beer in Wuhan began the trial operation of its 100,000-ton pure draft beer production line. The orientation for the products produced by such a production line is "pure draft beer to satisfy the needs of ordinary salary earners".

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