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Grupo Modelo, the Mexican brewer who is most famous for making Corona, announced late last week that by the end of the year they will distribute the Chinese beer Tsingtao exclusively throughout Mexico.
Curiously, Anheuser-Busch, who owns half of Modelo (though I understand it’s non-voting stock) also has a 27% stake in the Tsingtao Brewery. With a 13% share of the Chinese beer market, they are the largest brewery there among something like 400 breweries. Yanjing Beer is second and CRE Beer is number three. Less than a decade ago there were over 800 Chinese companies brewing beer, but increasing consolidation has led to the top ten breweries now accounting for 53% of the market vs. 22% in 1996. The modern beer industry in China began in the 1950s when new facilities were built in most major cities throughout the country. But it wasn’t until the 1970s that true growth started and — due at least in part to its vast population — by 2002 China became the world’s largest beer producer, displacing us at the top spot. The beer industry itself is similar to our own 50-to-100 years ago, with most being regional or local, with few national brands. Partly that’s due to China’s size and partly to its economic system at the time. With changes to the Chinese economy, more nationally recognizable brands are having a greater impact today much in the same way things progressed in the U.S. after World War II, though things are definitely moving more quickly. |
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Part of that growth is fueled by the the influx of large western beer companies, who began investing in China’s beer market beginning in the 1980s. After several missteps, a second wave of investors started in the early part of this decade and so far has been more successful. Instead of importing unfamiliar brands into China, western breweries are instead buying minority shares in existing local and regional breweries already established there. In the last few years breweries such as Anheuser-Busch, Carlsberg, Heineken, InBev and SABMiller have all made investments in Chinese beer.
Previously the market had been price-driven but a growing economy is leading to greater demand for premium brands, much like what the U.S. is experiencing right now, as well.
Tsingtao was founded in 1903 by German settlers in Qingdao and first began importing its beer to the United States in 1972. In 1996 there were four Tsingtao breweries, but today they operate 48 in China. Tsingtao beer is now sold in more than 50 countries worldwide.
Grupo Modelo, whose headquarters are in Mexico City, exports brands including Corona products, Estrella, Leon Negra, Modelo Especial, Pacifico, Negra Modelo and other beer brands to 150 countries. It is also the exclusive importer and distributor of Anheuser-Busch’s products in Mexico.
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