Expansion of Current Anheuser-Busch Business in China

1. • 金依梅 JIN, Yi Mei
• 孔庆臻 KONG, Qing Zhen
• 石京云 SHI, Jing Yun
• 林志杰 LIN, Jhih-Jie
• 周卫国 ZHOU, Wei Guo
Expansion of Current
Anheuser-Busch Business in China
Case 1
1
Applied Business Strategy Course Project

2. Anheuser-Busch Budweiser Anheuser-Busch Budweiser Anheuser-Busch Budweiser Anheuser-Busch Budweiser Anheuser-Busch Budweiser Anheuse
Final Exam - Case 1
1. Background JIN, Yi Mei 金依梅
enly0417@yahoo.com.cn
KONG, Qing Zhen 孔庆臻
2. Industry Structure njryo@163.com
SHI, Jing Yun 石京云
3. Acquisition / Partnering
jingyun.shi@hotmail.com
LIN, Jhih-Jie 林志杰
4. Creating New Brands jet988@gmail.com
5. Conclusion / Solution ZHOU, Wei Guo 周卫国
12644265@qq.com
2
er-Busch Budweiser Anheuser-Busch Budweiser Anheuser-Busch Budweiser Anheuser-Busch Budweiser Anheuser-Busch Budweiser Anheuser-Busch B

3. 1. Background
3

4. 1. Background
Based in St. Louis, Anheuser-Busch is the leading American brewer,
holding a 48.3 percent share of U.S beer sales to retails. The company
brews the world’s largest-selling beers, Budweiser and Bud Light, and
distributes these and many other popular brands through a strong
network of more than 500 independent wholesalers.
It is a wholly-owned subsidiary of Anheuser-Busch
InBev, the leading global brewer, and continues to
operate under the Anheuser-Busch name and logo.
1.Background 2.Industry 3.Acquisition 4.Creating 5.Conclusion
Structure / Partnering New Brands / Solution
4

5. 1. Background
Sales in China:
• Business in China for 5 years;
• Profitable (unit margins:25%; market share : >50%)
• High competition in highest price segment of product category
• Growth limitations in highest price segment due to affordability
Beer Industry in China :
• Highest price segment : small of industry (10%)
• Other price segment: big of industry (90%)
1.Background 2.Industry 3.Acquisition 4.Creating 5.Conclusion
Structure / Partnering New Brands / Solution
5

6. 1. Background
Our Target :
Plan an expansion strategy to expand into other price
segment of market
Present how to proceed with this expansion strategy
1.Background 2.Industry 3.Acquisition 4.Creating 5.Conclusion
Structure / Partnering New Brands / Solution
6

7. 2. Industry Structure
7

8. 2. Industry Structure
2.1 Brief History of Chinese Beer Industry
Preliminary stage (1900-1978) Brewery:90 players Volume:37.3ML
High cost high price
Rapid Expansion (1979-1989) Brewery:813 players Volume:656.4ML
Small scale brewery | Market demand exceeds supply
Gradually Matured (1990-Now) Brewery:813 players Volume:4480ML
Merge and Acquisition | The world first production and
consumption power(2002) | CR3 45%(2009)

9. 2. Industry Structure
Market Share U.S. CR4 vs CN CR3
No.1 An-Heuser-Busch No.1 Snow
No.2 Miller No.2 Qingtao
No.3 Coors No.3 Yanjing
9

10. 2. Industry Structure
2.2 The future beer industry demand and suply
10

11. 2. Industry Structure
World top 10 countries beer production (Million Litres)
China U.S. Russia Brazil German
Mexico Japan England Spain Polan
11

12. 2. Industry Structure
China Beer consumption per capita predict
12

13. 2. Industry Structure
HOT SPOTS FOR BEER PRODUCTS ACROSS CHINA
Nationwide distribution map of beer mfg. enterprises
Shandong, Henan
and Jiangsu are
the major
production bases
for beer in China
13

14. 2. Industry Structure
The percentage of Four big sales channels 2010, China
Traditional Channel
Catering &Restaurant
SuperMarket
Evening show, Bar, KTV
14

15. 2. Industry Structure
Market Share 2010, China
15

16. Oligopoly
3. Acquisition / Partnering
16

17. 3. Acquisition / Partnering
Top 10 Brand in China
Qingdao(TSINGTAO)
Xuehua(SNOW)
YANJING
BAIWEI(Budweiser)
Shancheng-Chongqing
ZHUJIANG(PERRLRIVER)
HARBIN
JINGWEI(Kingway)
XUEJIN(SEDRIN)
JINGXING(Kingstar)
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
17

18. 3. Acquisition / Partnering
Well-Know China Brand
Qingdao(TSINGTAO)
XUEHUA(SNOW)
YANJING
SHANCHENG-CHONGQING
ZHUJIANG(PEARLRIVER)
JINWEI(Kingway)
XUEJING(SEDRIN)
JINGXING(Kingstar)
HUIQUAN
HANSI
SIHAI
SHENGTAI
JINGSHIBAI(Jinsben)
HUANGHE
QINGLI
LIQUAN
LASA
LANBEI(BC)
DAXUE
ZHONGLOU
YINMAI
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
18

19. 3. Acquisition / Partnering
super
brand,
local
Brand Market Share brand,
40%
45.20%
middle
, 0 , 0 brand,
,0 14.80%
,0 ,0 ,0
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
19

20. 15
20
25
30
35
10
0
5
qingdao
sandeli
libo
hupai
laige
1.Background
zhupi
laoshan
huiquan
sanxing
huadan
guangshiboluo
LAIKE
Structure
binbingyang
2.Industry
jinbaishi
ganmai
nanchang
xinjiang
longjin
baisha
3. Acquisition / Partnering
jinxingwang
baoji
/ Partnering
3.Acquisition
wanli
Market share
qianjiang
hansha
lanmei
Local brand performance
shihao
lijia
lanma
4.Creating
sankong
New Brands
xinrongcheng
hongjian
20
/ Solution
5.Conclusion
Market share

21. 3. Acquisition / Partnering
Super brand performance
Grow rate
20%
15% 15%
12%
Qingdao(tsingtao) Xuehua(SNOW) Yanjing BAIWEI(Budweiser)
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
21

22. 3. Acquisition / Partnering
Super brand activity since 2010
18
16
3
14
12
10 7
8
6
1
4
4 7
2
0 1 0
Acquisition Partnering Creating new company
Qingdao(tsingtao) Xuehua(SNOW) Yanjing
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
22

23. 3. Acquisition / Partnering
Middle brand performance
Carlsber Chongqingshancheng
200.00%
2.5
150.00% 2
1.5
100.00%
1 Growth rate
Growth rate
50.00% 2011-5市场占比 2011年5月份
0.5
2010-5市场占比 2010年5月份
0.00% 0
重啤
雪花
重啤
雪花
雪花
重啤
雪花
重啤
雪花
重啤
雪花
重啤
嘉士伯
嘉士伯
嘉士伯
雪花
雪花
燕京
-0.5
-50.00% 第 第 第 第 第 第 第 第 第 第 第 第
第一 第二 第一 第二 第一 第二 一 二 一 二 一 三 一 四 一 三 一 四
位 位 位 位 位 位
重庆 宜宾 合肥 南京 自贡 嘉兴
大理 银川 乌鲁木齐
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
23

24. 3. Acquisition / Partnering
Middle brand performance
Jinxin
1.8
Zhujiang
1.6 2.5
1.4
1.2 2
1
0.8
1.5
0.6
0.4 Growth rate Growth rate
0.2 1
0 2011年5月份 2011年5月份
奥克（雪花）
金星
金星
金星
雪花
金星
雪花
嘉士伯
-0.2 0.5
2010年5月份 2010年5月份
0
重啤 雪花 重啤 雪花 雪花 重啤 雪花 重啤 雪花 重啤 雪花 重啤
-0.5
第一 第二 第一 第二 第一 第三 第一 第四 第一 第三 第一 第四
地位 第一 第二 第一 第二 第一 第一
重庆 宜宾 合肥 南京 自贡 嘉兴
郑州 昆明 成都 贵阳
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
24

25. 3. Acquisition / Partnering
Middle brand performance
Jinwei
1.8
1.6
1.4
1.2
1
0.8 Growth rate
0.6
0.4 2011年5月份
0.2
0 2010年5月份
-0.2 金威 青岛 金威 雪花 金威 雪花 金威 珠江
-0.4
第二 第一 第五 第一 第四 第一 第六 第一
深圳 天津 成都 佛山
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
25

26. 3. Acquisition / Partnering
Middle brand Activity since 2010
100%
100%
Production Capability Production Capability Improvement
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
26

27. 3. Acquisition / Partnering
West China Beer Volume Growth
West China (9 Provinces, 1 City)
Before 2003 Improved to 12L/P
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
27

28. 10
15
20
25
30
35
0
5
qingdao
landai
yanjing
sandeli
1.Background
shengli
beike
libo
zhujiang
baotuquan
hupai
haomen
xili
Structure
2.Industry
laige
hansi
huanghe
zhupi
xingyinge
lidou
laoshan
beijing
3. Acquisition / Partnering
shangcheng
huiquan
jinxing
/ Partnering
3.Acquisition
yinbao
Top Local Brand
sanxing
guangming
aoke
huadan
lanjian
heishi
guangshiboluo
jinling
4.Creating
KK
New Brands
LAIKE
XIHU
Sanjiu
• Acquisition or Partnering the local brand
binbingyang
yinze
28
/ Solution
5.Conclusion

29. 3. Acquisition / Partnering
West China focusing
9 Provinces, 1 City
3.Acquisition
2.Industry 4.Creating 5.Conclusion
1.Background / Partnering
Structure New Brands / Solution
29

30. 3. Acquisition / Partnering
West China focusing
9 Provinces, 1 City
3.Acquisition
2.Industry 4.Creating a 5.Conclusion
1.Background / Partnering
Structure New Brand / Solution
30

31. 3. Acquisition / Partnering
9 Provinces, 1 City
3.Acquisition
2.Industry 4.Creating a 5.Conclusion
1.Background / Partnering
Structure New Brand / Solution
31

32. 3. Acquisition / Partnering
9 Provinces, 1 City
3.Acquisition
2.Industry 4.Creating a 5.Conclusion
1.Background / Partnering
Structure New Brand / Solution
32

33. creativity ingenuity
4. Creating New Brands iN
33

34. 4. Creating New Brands
Head office location
HeiLongJiang FuJian GuangDong ZheJiang HuBei JiangSu
Province Province Province Province Province Province
•
•
•
•
•
•
黑 福 廣 浙 湖 江
龍 建 東 江 北 蘇
江 雪 珠 國 金 南
哈 津 江 光 龍 京
爾 啤 啤 啤 泉 金
濱 酒 酒 酒 啤 陵
啤 酒 啤
酒 酒
• Harbin • Sedrin • ZhuJiang • GuoGuang • Chero • Jinling
Since 1900 1986 1985 1985 1978 1958
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
34

35. 4. Creating New Brands
HuNan ZheJiang ZheJiang JiLin
Province Shanghai Province Province Province
•
•
•
•
•
湖 上 浙 浙 吉
南 海 江 江 林
金
KK
紅 雙 冰
白 啤 石 鹿 川
沙 酒 梁 啤 啤
啤 啤 酒 酒
酒 酒
• JinBaiSha • KK • Red Rock • Double Deer • BingChuan
1976 1958 1983 1972 2003
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
35

36. 4. Creating New Brands
Acquisition Donated to
Price the China Gov.
?
HKD USD
5,100,000,000
+ 8,000,000
+ Worth it ??
? Worth it ??
RMB RMB
5,886,000,000
+ 1,000,000
+
Source :
• http://www.ab-inbev.cn/c_impacts.html
• http://fgw.harbin.gov.cn/tzhrb/tzdt/2004/09/3772.htm
• http://www.putian.gov.cn/a/20100709/00001.html
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
36

37. 4. Creating New Brands
• online retail stores in China
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
37

39. 4. Creating New Brands
®
百威爱之麦
Anheuser-Busch International Inc.
安海斯-布希国际公司
Sponsorship advertising
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
39

40. Internet Marketing (Webvertising)
40

41. 4. Creating New Brands
Newspaper advertisement
Television advertisement
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
41

42. 4. Creating New Brands
Out-of-home advertising
Metro advertisement
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
42

43. 4. Creating New Brands
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
43

44. by using attractive women
in advertising
to attract more customers

45. Product Placement ( Embedded Marketing )
45

46. 4. Creating New Brands
Retail Price
Product Line Positioning Remarks
(CNY)/ 350ml
iBud+ ultimate Superbrand 18 The ultimate taste
iBud+ High-End 8 Core product
iBud basic Mainstream 3.5 Anyone can afford
iBud ZERO Niche 8 Non-alcoholic Beer
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
46

47. 4. Creating New Brands
It's not only for young generations or for old ones,
it’s for the people who care their health.
• Organic
• Natural
• Healthy
• Vitamin B
• Have you already prepared
gifts for Chinese New Year?
4.Creating
2.Industry 3.Acquisition 5.Conclusion
1.Background New Brands
Structure / Partnering / Solution
47

48. 4. Creating New Brands
iBud+ competitors
Source :
Auchan (Yingtian Street, Nanjing), 2012-03-28

49. 4. Creating New Brands
iBud basic competitors
Source :
Auchan (Yingtian Street, Nanjing), 2012-03-28

50. 4. Creating New Brands
Low-End Market
Creating low-end brands
iBeer ® 美国艾碧尔啤酒
Target Market: Under 30, 18 – 21 years old*
Gold Medal American Beer ®
美国金牌啤酒
Target Market: First choice for Low-cost
Competition-based Pricing
lowest-price
CNY 1.4 / 350ml
Source :
Auchan (Yingtian Street, Nanjing), 2012-03-28

51. Execution
5. Conclusion / Solution
51

52. 5. Conclusion / Solution
Strength Weakness
S W
SWOT 1. Bud is at top level segment 1. Market share relative low
Analysis 2. Have good company 2. Current segment don’t have
reputation much space to expand
on AB 3. Product-Line narrow
3. Have good understand of
company Chinese beer market
Opportunity Threats
O T
1. Market Volume high 1. Many players, competition
2. Pcc relative low 2. Other substitute prevail, like
3. GDP increase rapid, and red wind
People can afford more.
5.Conclusion
2.Industry 3.Acquisition 4.Creating
1.Background / Solution
Structure / Partnering New Brands 52

53. Share of Segment
223.3 MM Bbls（87.5%) 26.1 MM Bbls（10%) 6.3 MM Bbls（2.5%）
100%
90%
26.4%
Others 31.0%
80% Others
55.7% InBev
70% Others 6.9% InBev 2.2%
Harbin 2.5% Harbin 2.7%
% of Volume
Yanjing 5.0%
60% Yanjing 10.6%
CRSB 3.8%
50%
CRSB 15.2%
InBev 5.4%
40% Budweiser 35.1%
Harbin 4.9%
30% Yanjing 10.5%
20% Tsingtao 38.4%
13.2%
CRSB
10% Tsingtao 20.2%
Tsingtao
Tsingtao
Tsingtao
10.3%
0%
Popular Premium Super Premium 53
Source: SEEMA Redspider LLC

54. 5. Conclusion / Solution
Expansion Strategy
Existing Products New Products
Market Penetration Product development
1. Raise the market share of 1. Create New Brand of other
major cities price segments
Existing Markets
2. Expand market share by
acquisition of other brand of
target price segments
Market development Diversification
New Markets
5.Conclusion
2.Industry 3.Acquisition 4.Creating
1.Background / Solution
Structure / Partnering New Brands 54

55. Market Penetration
第一位 第二位 第三位 第四位
市场
品牌 占有率 品牌 占有率 品牌 占有率 品牌 占有率
北京 燕京 89.46 青岛(五星) 3.35 北京 2.67 青岛 2.19
长沙 白沙 87.4 百威 3.26 青岛 2.11 金威啤酒 1.55
成都 蓝剑 45.74 绿叶 42.71 雪花 3.38 百威 0.83
大连 黑狮 60.46 棒棰岛 18.29 凯龙 4.48 青岛 3.72
福州 惠泉啤酒 47.78 雪津 28.81 榕城 7.81 新榕城 5.83
广州 珠啤 28.78 珠江纯生 28.39 生力 15.89 广氏菠萝啤 13.08
贵阳 漓泉 11.56 金星王 5.16 青岛 5.07 蓝带 4.42
哈尔滨 哈尔滨啤酒 85.88 三星 12.32 雪花 0.75 蓝带 0.26
海口 力加 84.73 奥克 5.4 青岛 4.23 青岛(五星) 1.17
杭州 西湖 83.35 百威 4.3 青岛 3.3 中华 2.46
合肥 龙津 58.81 雪花 13.45 零点 9.38 圣泉 5.85
济南 趵突泉 80.55 青岛 6.07 黑趵 5.6 北冰洋 2.92
昆明 大理 39.35 澜沧江 25.94 百威 10.39 青岛 1.05
南昌 南昌 88.29 百威 3.31 惠泉啤酒 2.56 蓝带 1.85
南京 金陵 62.27 百威 13.5 莱克 9.59 青岛 4.86
南宁 漓泉 65.3 万力 22.47 青岛 3.62 蓝带 3.21
宁波 KK啤酒 54.18 百威 3.58 嘉士伯 2.04 中华 2
青岛 青岛 91.93 崂山啤酒 5.15 青岛(五星) 1.19 钱江 0.41
上海 三得利 57.75 力波 16.5 百威 11.9 青岛 4.37
深圳 金威啤酒 67.78 青岛 13.78 珠江纯生 3.12 喜力 2.81
沈阳 雪花 67.81 绿牌 17.75 青岛 6.23 黄牌 3.29
石家庄 三九 81.85 燕京 3.96 朝日 3.96 青岛 3.43
苏州 三得利 40.49 太湖水 21.52 百威 17.33 青岛 4.14
太原 迎泽 73.49 青岛 8.37 百威 3.1 青岛(五星) 2.68
天津 莱格 34.44 丽都 14.47 豪门 9.01 蓝带 7.17
温州 百威 34.82 蓝带 9.96 百迪 1.08 青岛 1.08
乌鲁木齐 新疆啤酒 76.38 乌苏啤酒 18.83 蓝带 1.01 青岛 0.66
无锡 太湖水 71.65 百威 12.24 青岛 4.69 三得利 4.36
武汉 行吟阁 83.26 金龙泉 10.22 百威 2.44 青岛 1.65
西安 汉斯 83.64 宝鸡 6.35 百威 2.34 汉莎 1.87
厦门 惠泉啤酒 52.11 雪津 32.57 银城王 7.54 百威 2.97
珠海 珠啤 63.06 青岛 9.97 喜力 4.37 蓝带 3.94

56. 5. Conclusion / Solution
Advantage and Disadvantage analysis
on Acquisition
Advantages Disadvantages
1. Expand market share in short time 1. High initial investment
2. Decrease competitors in target price 2. Not easy to adjust target company
segment culture
3. More easier to get localized 3. Relative high failure rate than
creating new brands
5.Conclusion
2.Industry 3.Acquisition 4.Creating
1.Background / Solution
Structure / Partnering New Brands 56

57. 5. Conclusion / Solution
Advantage and Disadvantage analysis
on Creating new brands
Advantages Disadvantages
1. Mostly fit for company’s culture 1. Need long time to expand market
2. Accurately position the target price share
segment 2. Possibly fail due to not fit for local
market demand
5.Conclusion
2.Industry 3.Acquisition 4.Creating
1.Background / Solution
Structure / Partnering New Brands 57

58. 5. Conclusion / Solution
Market Expansion
Creating new brands
Acquisition
Case Study : Team 3
Expansion of Current
Anheuser-Busch Business in China

59. Any Question?
59