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ZHIGANG TAO

CHINESE BEER INDUSTRY, 2004

In May 2004, an unprecedented war for acquiring the Hong Kong-listed Harbin Brewery, China’s fourth largest brewery, between Anheuser-Busch and SABMiller put the fast growing Chinese beer industry in the hotspot of the world’s attention. The full-scale acquisition by Anheuser-Busch and the subsequent delisting of Harbin Brewery1 finally ended the war. But this is just the prologue. With its steady growth rate (expected 6% per annum over the next five years2) and low per capita consumption (an average of 18L/person3), the Chinese beer industry exhibits promising prospects, which has attracted foreign beer makers into the market with a vigour not seen since the mid-1990s.4 Meanwhile, local breweries are actively seeking acquisitions and alliances, scrambling for strategic positions in preparation for the upcoming competition. A fierce battle is on the anvil in this second-largest beer market in the world.

History of China’s Beer Industry

Primitive beer brewing in China can be traced back to 23 BC, when it was called “kiu”.5 However, beer production for market consumption has a history of only one hundred years in China. In 1900, Russians established the first brewery in China in the Harbin Province, called the Ulubulevskij Brewery. In the next five years, three more breweries were set up in the same place by the Russians, the Germans and the Czech respectively. In 1903, British and German merchants established the Anglo-German Brewery Co. in Tsingtao, formerly known as the Tsingtao Brewery, the biggest beer maker in China.6

At about the same time, Chinese nationalist bourgeoisie also invested in several breweries, for example, the Northeast Province Brewery in Harbin. However, all of them were small-scale breweries with low output and narrow product variety. Their products were mainly for the consumption of the expatriates, the rich and the invasion army.

The beer industry went through three stages of development after the founding of the People’s Republic of China (PRC).
1 “Anhueser-Busch to Acquire, Delist Chinese Beer Maker Harbin Brewery”, Knight Ridder Tribune Business News, July 12th 2004
2 “Beverage Industry in China”, BNP PARIBAS Sector Note, March 16th 2004
3 “The Analysis and Estimate of Chinese Brewage Brands’ Development”, www.emkt.com.cn, March 10th 2004
4 Ben Dolven. “Big Brewers Try, Try Again”, Far Eastern Economic Review, July 22nd 2004
5 Linda Raley, “A Concise Timeline of Beer History”, www.beerhistory.com, October 4th 2004
6 “A Probing Study of China’s Beer History”, www.eguo.com, September 22nd 2004
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