Foreign beer brewers face flat market amid slowing economy

By Xie Jun Source:Global Times Published: 2016-2-17 23:08:01

Consumers quaff cheaper local brands as buying power wanes


A local resident shops for beer in a supermarket at Qingdao, East China's Shandong Province. File photo: CFP



 

Graphics: GT



Global business was mixed for ­international beer brands in 2015, and the results they've released so far signal that China has become one of their tougher markets as the nation's economy slows down and competition heats up.

"China's beer markets in the past two years were full of challenges, and overall sales in the industry have slumped," Carven Hu, a public relations representative of Denmark-based brewer Carlsberg Group, told the Global Times on Wednesday via e-mail.

In 2015, the group's revenues edged up 2 percent to 65.354 billion Danish krone ($9.78 billion). ­Profits declined 8 percent to 8.457 billion Danish krone, according to financial records released by the company on February 10.

Netherlands-based brewer Heineken NV reported better global business results in 2015. Profits increased 16 percent year-on-year to 2.05 billion euros ($2.28 billion), the company said on February 10.

However, both companies saw their business shrink in China. According to a report by the Shanghai-based news website jiemian.com on Tuesday, Carlsberg maintained powerful growth momentum in provincial-level regions such as Southwest China's Chongqing in 2015. However, its total liquid volume in the Chinese mainland fell by about 2 percent in 2015.

On November 11, 2015, Reuters cited a Carlsberg executive as saying that the company might close some small breweries in 2016, particularly those in East China. Carlsberg closed five breweries in China in 2015, according to jiemian.com.

Hu said, however, that Carlsberg's business performance in China was "relatively good" in 2015 considering the overall weakness in the beer market. He also noted that some brands under Carlsberg, such as 1664, achieved gains of more than 50 percent in volume, which will contribute to Carlsberg's future profit growth. 

The jiemian.com article noted that Heineken's sales volume in China slumped "mildly" year-on-year in 2015.

The Japan-based Nikkei Asian Review reported on November 11, 2015 that Anheuser-Busch InBev, the Belgium-based beverage giant, would cut ad spending in China.

Yan Qiang, an analyst at Beijing-based consulting company Hejun Consulting Ltd, told the Global Times on Wednesday that China's economic downturn and the government's campaign to crack down upon the misuse of public funds have caused difficulties for all brewers in China.

"This is not only about overseas brewers. Domestic brewers are also affected," Yan said.

According to the interim report released on August 31, 2015 by ­Tsingtao Brewery Co, a major domestic beer producer based in East China's Shandong Province, revenue fell 5.26 percent year-on-year in the first half of 2015.

An employee at Tsingtao, speaking on condition of anonymity, told the Global Times on Wednesday that official data about the company's 2015 financial results has not been released, so it's hard to make any comment at present. But she emphasized that workers in the sector are all "putting their backs into promoting the industry."

Although all beer producers are affected by slowing demand, Yan said that the situation was a bit harder for overseas brewers.

"The distribution channels of overseas brewers are usually concentrated at the high end of the market, with a focus on karaoke bars and nightclubs, and those places were hit hard by the anti-­corruption campaign in the past two years," Yan noted.

"Domestic beers, however, are cheap enough for daily consumption. Although consumers' buying power for luxury goods has dwindled, they still have enough money to buy cheap commodities," he said.

 

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