SABMiller aims high in China

Global brewing giant SABMiller said it will launch its first international beer brand in China this year, expected to be Miller Genuine Draft (MGD), as it tries to boost profits in the world's biggest beer market.

The brewer of Miller Lite, Castle and Peroni is already No 2 player in the Chinese market. It has a 12 per cent share with national brands such as Snow, but hopes to launch a global brand over the next few months in China's gateway cities.

Andre Parker, managing director of SABMiller's Africa and Asia region, said last week he was looking to launch the brand in the Beijing, Shanghai and Guangdong areas and catch up with other top brands such as Heineken and Budweiser.

"It would be nice to get into the market in China in March/April ahead of the summer season," Parker told a news briefing which followed a group trading update.

The brewer is test-marketing its Peroni and Pilsner Urquell brands, but the Chinese taste for light beers and the attraction of an American name make MGD a clear favourite.

SABMiller has expanded rapidly since 1994 in China, but now its priority is building brands in a market that makes a profit for SABMiller but does not yet give a return on the cost of capital invested there.

"We don't need more acquisitions, we need to develop brands," Parker added.

China's beer market is one of the fastest growing in the world along with Russia, expanding at 6 per cent to 7 per cent a year. But it is difficult to make a profit due to low beer prices, and many big brewers have entered the market only to leave again.

The world's top three brewers, Belgian's InBev, Anheuser-Busch and SABMiller, are the three main international players in China.

These brewers see potential Chinese per-capita beer consumption at 29 litres a year compared with most of western Europe (100 litres) and the world's top beer-drinking nation, the Czech Republic (145 litres).

SABMiller, which in China ranks behind Tsingtao Brewery, owns 49 per cent of its joint venture called China Resources Snow Breweries (CRSB), while the remaining 51 per cent is owned by Beijing-backed China Resources Enterprise.

US Budweiser brewer Anheuser-Busch holds 10 per cent of Tsingtao and plans to raise that to 27 per cent. It also bought China's No 4 brewer Harbin for US$720 million ($1.01 billion) last year after a takeover tussle with SABMiller.

- REUTERS