AB InBev opens new factory in Sichuan

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Belgium-based Anheuser-Busch InBev (AB InBev), the world’s largest brewer, opened its Ziyang Greenfield factory in Sichuan Province Thursday, its first plant in China’s southwest.

With an investment of 650 million yuan ($100.10 million), the factory will produce Budweiser and Harbin Beer for the market in the southwestern region, which includes Sichuan, Yunnan and Guizhou, as well as Chongqing Municipality and the Tibet Autonomous Region.

“China is the engine of the global beer market, and its performance is outstanding,” said Carlos Brito, CEO of AB InBev, adding that the first bottle of beer from the new plant is expected to hit the market by the end of June.

“It will trigger fierce competition in the southwestern region,” Yang Qingchun, director of public relations with Societ Insights & Decision, a Shenzhen-based marketing consulting firm, told the Global Times Thursday.

According to Yang, the southwestern region already has several producers, such as China Resources Breweries and Beijing Yanjing Brewery, with China Resources Breweries holding more than 60 percent of the market share in the region.

However, Yang said the market still offers potential as annual beer consumption in the southwestern region is 20 liters per head, compared with an average of 30 liters for the whole country.

“The new plant will impact the sales of rivals such as Snow Beer and Chongqing Beer,” said Zhao Yong, an industry researcher from Haitong Securities, adding that Harbin Beer’s strong network will help with sales for AB InBev.

AB InBev was created in 2008 when Belgium’s InBev merged with US brewer Anheuser-Busch. It currently has 33 breweries in China across 13 provinces with over 25 beer brands, including Budweiser, Harbin and Sedrin. In March, the company acquired China’s Weixue Beer Co, the second largest brewery in Henan Province.

Miguel Patricio, president of AB InBev Asia, said the company is also upgrading its plants in Henan, Liaoning and Fujian provinces, and is looking for opportunities in Guangxi Zhuang Autonomous Region.

China became the largest brewery market in the world last year. After years of fierce competition and consolidation, there are now fewer producers.

According to figures from Societ Insights & Decision, the four giants – China Resources Breweries, Tsingtao Brewery, AB InBev and Beijing Yanjing Brewery – account for more than 60 percent of market share in China, and 72.5 percent of profits.