China: Global brewing giant SABMiller Plc announced 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, Reuters revealed on January 18. The brewer of Miller Lite, Castle and Peroni is already No 2 player in the Chinese market with a 12 percent share with national brands such as Snow, but it hopes to launch a global brand this spring in China's gateway cities.

Andre Parker, managing director of SABMiller's Africa and Asia region, said on January 18 he is 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 on Tuesday 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 brand 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. The Chinese beer market will continue to grow but our priority is to grow brands," Parker added.

China's beer market is one of the fastest growing in the world along with Russia, expanding 6-7% 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 later. The world's top three brewers, Belgian's InBev, Anheuser-Busch and SABMiller, are the three main international players in China, while Heineken is also present.

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

SABMiller, which in China ranks behind Tsingtao Brewery, owns 49% of its joint venture called China Resources Snow Breweries (CRSB), while the remaining 51% is owned by Beijing-backed China Resources Enterprise Ltd. U.S. Budweiser-brewer Anheuser-Busch holds 10% of Tsingtao and plans to raise that to 27%, while it also bought China's No 4 brewer Harbin for $720 million last year after a takeover tussle with SABMiller.

SABMiller has been in expansion mode in China, buying three Yangtze River Delta brewers from Australia's Lion Nathan Ltd. last September, giving SABMiller a third area to focus on along with the Beijing area and Sichuan in south-west China. In August, the SABMiller announced it would build a brewery in the wealthy southern province of Guangdong, expected to be operational by end-2005, to give it access to one of the key growth areas for international beer brands.

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