Tsingtao Brewery, China's largest beer maker, 9.9% owned by Anhueser-Busch, announced on August 13 a 15% drop in second-quarter net profit. The fall was attributed to the SARS outbreak that kept beer drinkers away from bars and restaurants, and higher barley prices that inflated costs. Tsingtao's first-half profit fell 3.8 % to 108.8 million yuan. For the full year, Tsingtao's net profit is expected to rise 12.8 % to 251 million yuan, according to the average forecast of 13 analysts polled by Reuters Research.

Tsingtao earned 49.1 million yuan (US$5.9 million) for the three months ended in June, according to Reuters calculations from first-half figures. After its first quarter results, the company warned that the SARS outbreak would affect its next set of figures. That said, the ¥49.1m did come in higher than many analysts expected.

"China is going through an exceptionally hot summer and beer consumption is growing," said Citigroup Smith Barney Director of Research Charles Cheung. Tsingtao holds about a 13 % share of the mainland beer market, the world's second-largest after the United States and growing at 6% a year.

China's per capita beer consumption is about 18 litres per year, compared with 50 litres in Japan and 100 litres in Europe, and foreign brewers have been betting that Chinese will drink more beer as they grow wealthier.

Anheuser-Busch Cos Inc, the world's biggest brewer, recently doubled its stake in Tsingtao to 9.9 % and plans to increase that further to 27 % over seven years. "We are one step ahead of the market with our alliance with Anheuser-Busch. We will follow this trend and combine our resources to consolidate and expand our leadership in the Chinese market," the firm said in a brief statement.

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