Anyone who’s ever ordered a beer at a Chinese restaurant has likely encountered Tsingtao. But could the same beer used to wash down Egg Foo Yung also go with pizza, or burgers? As China becomes more familiar to Western consumers, especially with all eyes turning to Beijing for the 2008 Summer Olympic Games, the time might be right for a good Chinese brew to go mainstream.
Tsingtao seems ideally positioned to do this, because it already has a strategic alliance with a company that has a fair bit of experience selling beer to the masses. Anheuser-Busch owns 27% of Tsingtao Brewery Company, Ltd.
But interestingly enough, it’s not Anheuser-Busch that’s looking to expand distribution of Tsingtao– it’s U.S. distributor Barton Beers. And the intended positioning for Tsingatao is not mass market, but specialized. In January, CMOmagazine.com reported that Barton Beers would like to expand Tsingtao, “The Great Beer of China,” by introducing it into fancy grocery stores and fashionable restaurants featuring Asian-fusion cuisine. CMO quoted marketing manager Tom Willet as saying Tsingtao would move from “Chinatown to downtown.” http://www.cmomagazine.com/read/010106/sr_watch_flank.html
Meanwhile, Anheuser-Busch is introducing another export brand, Harbin, to the United States. Harbin Brewery is the fifth largest in China, and is wholly owned by Anheuser Busch.
So what’s behind this odd state of affairs? Why isn’t Anhesuer-Busch backing Tsingtao? Why wouldn’t Tsingtao want to capitalize on its relationship with the maker of the “King of Beers?”
There is clearly more to this story than meets the eye. With beer volume declining in the United States, Anheuser-Busch desperately needs a piece of the growing Chinese market. But the last thing the beer giant needs is another strong competitor on its home turf. A premium export brand offers Anheuser-Busch the company the potential to improve margins, not dilute them.
Furthermore, Anheuser-Busch’s strategic alliance with Tsingtao may not be one forged from a position of strength. Back in 2000, General Manager of Tsingtao Brewery Peng Zuo Yi stated, “The top leaders of China were worried that Chinese beer would collapse because of all the competition. But five years later, it turns out the Tsingtao has succeeded. Our attitude has changed from fear of the foreigners to driving them out of the market.” While Budweiser may not have been driven from the market, Anheuser Busch’s investment in China has not been profitable; “The King of Beers” is no more than a niche brand there. The maxim, “If you can’t beat ‘em, join ‘em” may have won the day.
Link: http://www.bebeyond.com/KeepCurrent/Recommended/Tsingdao.htm
However, if, after holding their ground at home, Tsingtao is now aiming to take the fight abroad, they should look beyond the upscale eateries of Manhattan. Just as Lenovo acquired IBM’s Thinkpad brand in 2005, Tsingtao should look to acquire a brewery with a large distribution base. Too bad the merger put Molson Coors off the table…
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