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Cheers to the Asian beer market

It was probably a change of mind when Carlsberg dropped its "Probably the best beer in the world" slogan for "'That calls for a Carlsberg".

Mr Soren Ravn, managing director, Carlsberg, explained: "We are coming with a brand new communication so we can help fuel the (market) growth in Singapore."

The Danish brewer acknowledges that Singapore is one of its key markets for the Carlsberg branded beer, with the high number of expatriates here who know about international beer brands and the different beer types.

But analysts say markets like Singapore are just part of an Asian regional strategy in which brewers are actually looking further north at China, which consumes 40 billion litres of beer annually, or about one quarter of global beer consumption.

Research firm Spire Research & Consulting says China's beer consumption is set to expand at a compounded rate of 5 to 10 per cent over the next three to five years.

The country's economic growth is overflowing into a booming beer industry as its growing middle class and increasing discretionary income makes it the biggest consumer of beer in Asia and the fastest rising.

"China is very much a localised beer market, so conditions differ very much by locality and barriers to entry differ according to locality as well," said Mr Leon Perera, group managing director at Spire.

"Very often access to distribution, to retail outlets, tends to be influenced by local authorities, by local companies. That's why the preferred entry route for any foreign companies is through acquisition," he added.

Experts also point to other growing markets in the region like Vietnam and India. That is reflected in companies' expectations, like Carlsberg, which hopes Asia will account for up to one quarter of its group global revenue in five years' time.

That is up from the 5 to 10 per cent that Asia contributed last year to the company's US$11 billion (S$13.8 billion) sales.

But Mr Perera cautioned that the outlook just might not be so bubbly.

"The headwind or the obstacle that this growth might encounter … is really health consciousness, across all F&B research, as an economy matures, health consciousness increases to the point that it becomes an absolutely critical factor, affecting purchasing decisions by consumers," he said.

11 Apr. 2011

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