(Chinese) Beer's The Thing

Today's news reports that Snow Beer is now the world's best selling beer (hat tip to Shanghaiist), overtaking Bud Light according to an article in the Guardian. The article states that last year "Bud Light sold 5.18bn litres – about 9bn pints - while Snow sold 5.12bn litres", though this year Snow has already sold 5.1 billion litres in the first 9 months of the year (is this an Olympics bump?!?). This is a 20% raise in sales of Snow, while sales for Bud Light are down this year.

What's most interesting about this, and significant for other Chinese brands outside the beer industry, is that Snow hardly has a presence in China's major cities. Yanjing Beer controls the Beijing market, Guangzhou is ruled by Zhujiang, Shenzhen is dominated by Kingway, and Shanghai has a number of brands battling for top spot. In these cities, Snow is often absent from the restaurant picture, or only available at smaller establishments. So how does Snow do so well? Through major marketing and dominance in restaurants in second and third tier cities, Snow has left its mark on the China drinking picture.

Yes, you can be like the major brands and focus on the top 4 cities in China, or you can get down and dirty and battle it out in the provincial capitals and small countryside towns around the nation. Price is incredibly important if you want to get into these markets and distribution (especially for something like beer) is equally important, something Snow has down pat.

While this approach might be different for foreign brands (pricing is often preventative), other Chinese brands should take note, and some have (ie Li Ning). It's not easy to go head to head with the big international boys in the major cities, but its a vast country, take to the countryside, and the results just might be impressive market domination.

Since we're discussing beer, very interesting news recently from China's nascent antitrust regulators who have approved the Anheuser-Busch -Inbev merger (discussed previously on this blog), though they also barred the megabrewer from expanding its stake in Qingdao as well as preventing them from pursuing Snow and Yanjing. Interesting both for the antitrust aspect in itself, but also for the limits placed, though I will save that for someone else to write about.