These are local beers?
Even though state-owned enterprises are supposed to be going by the wayside, there are still an awful lot of them around, because to close them would put a lot of people out of work. Then you’ve got civil unrest, and that’s a no-no.
So you have these state-run breweries, and many of them are selling beer at below cost. It’s very hard to compete. I’ve seen beer on the market—very low-gravity beer, 8 Plato or so—in a can for 14 ½ cents. The price of the can to the brewer is about the same as it is in the West, so the can’s got to cost 7 or 8 cents. I defy any you to carbonate any liquid and put it in a can for the other 7 cents.
Who are the other players?
Since the late nineties, Tsingtao has bought something like 35 to 40 breweries. So many of these local breweries have been absorbed by the big guys. The biggest brand in China is Snow, which is 51 percent owned by SAB. InBev owned a tremendous number of breweries, and they bought Budweiser, of course, and Budweiser had already bought Harbin Brewing Group in China—and Harbin had quite a few breweries. A new Bud plant has just opened near us in Chao Qing.
I’m reminded that when A-B became this country’s largest brewer, they did so with something like 8 percent of the market. At a time when there were masses of breweries and no national brands, 8 percent could put you on top. I get the sense that China has just now moved past that stage.
But not that far past it. Tsingtao, Snow, Yanjing are the three biggest brands, I believe.
Who are you competing with?
We are medium-upper priced. At the very high end, you have Heineken, and they’re about a dollar a can—that’s a lot. We’re more like 55 cents a can, and the cheap stuff comes in at 25 cents a can—then you’ve got these very low priced brands. There aren’t a lot of U.S. imports. Most of the U.S. beers in China are brewed in China. Coors Light, Bud—and they’re more like 60-65 cents.
And now you’ve got this new beer in a class all its own.
And so far, knock on wood, we have no competition. But in China, the sincerest form of flattery is intellectual property theft, so that’s one thing everyone’s worried about, that someone will try to steal our thunder.
How’s your Chinese?
Very, very poor. I’m kind of ass-backwards: I can read more than I can say, because the characters went to Japan and they’re often the same or similar. I can go into a store in China and write down what I want. They’ll look at it, and show it to all their co-workers and get a big kick out of it, then give me exactly what I asked for. I can even play Liar’s Dice in Cantonese!
And do you know all your brewing terms?
I’ve got some of them. When I come up with words for “bright beer tank,” they do a double-take.