The Chinese beer market has long been extremely regional, with only Tsingtao cutting across provincial barriers to become a true national brand. Now it has competition:
SABMiller's Chinese beer brand, Snow, is set to sell 10bn pints this year - overtaking Anheuser Busch's Bud Light to become the world's largest beer brand.I'm actually quite surprised to hear this, as Tsingtao has a respected tradition, and long-standing distribution networks (alcoholic beverage distribution in China is notoriously corrupt and fragmented). Economies of scale backed by foreign capital, coupled with aggressive distribution, may explain part of Snow's success:
The company entered the market in 2002 with a Chinese joint venture partner and invested heavily in the country's only mainstream national beer brand sold across all the provinces - overtaking Tsingtao Breweries in 2006.
But despite Snow's growth, profitability for SABMiller is low. Snow accounts for 18% of its global beer volumes, but less than five per cent of profits.
Though prices rose in the past year, the average price for half a litre of Snow is still only two Chinese yuan - 16p.
For what it's worth, I found Snow undrinkable when I sampled it in Beijing last year. Stories like this make me question why I will be moving to the beer wasteland that is China this December.