Anheuser-Busch InBev Brings Smart Drinking to China
The world’s leading brewer is looking to diversify its global footprint by tapping into the unbound potential of China, but it is corporate social responsibility, not revenue gain, that is seemingly driving the expansion
Anheuser-Busch InBev (AB InBev) has announced the launch of its four Global Smart Drinking Goals, with Shanghai identified as a core city of analysis over the coming years; tying in with the Company’s ongoing drive towards enhanced Chinese saturation.
The initiative has been introduced with a view to deepening its commitment to implementing effective and collaborative solutions to reduce the harmful use of alcohol, and the new goals - to be achieved by the end of 2025 - demonstrate an evolution in AB InBev’s approach to responsible drinking; from helping to raise awareness of alcohol responsibility to positively changing behaviours by investing in longer-term, evidenced-based approaches to reduce harmful drinking trends.
The first set of goals included partnerships, public education initiatives, retailer training and other activities that reinforced responsible drinking, and the new Global Smart Drinking Goals are set to build on that legacy by focusing on two key areas; changing behaviours through carefully conducted analysis and subsequent investment in programmes, and empowering consumers to make smarter drinking choices.
As the world’s leading brewer, AB InBev believes it has an important role to play in contributing to these necessary changes and has earmarked Shanghai as one of six cities around the world to carry out its evidence-based solutions; launching multi-year pilots to reduce the harmful use of alcohol in each location by 10 percent and thus shifting deeply engrained social dynamics.
“Further committing to helping influence social norms to reduce harmful alcohol use, AB InBev is investing at least US$1 billion across our markets in dedicated social marketing campaigns and related programs,” the Company said. “This financial investment will help support the achievement of all of our Global Smart Drinking Goals.
“By end of2025, we will expand our product portfolio to ensure that at least 20 percent of our global beer volume is no -or lower - alcohol to reduce harmful alcohol use.”
Carlos Brito, CEO of AB InBev added: “As the leading global brewer, we believe we have a unique role to play in championing a culture of smart drinking globally.
“For more than 30 years, we have invested in initiatives to promote responsible drinking and discourage harmful drinking. Now, we are taking our efforts to the next level, moving beyond awareness-raising to driving real impact for the communities in which we live and work.”
Addressing societal challenges
In conjunction with the announcement of the Global Smart Drinking Goals, AB InBev has created a short video -‘Celebrate Tomorrow’ - bringing to life the concept that “smart drinking today helps make tomorrow possible”. The six cities of Shanghai, Buenos Aires, Sao Paulo, Mexico City, Brussels and New York City are all featured as part of the promotion which underpins AB Inbev’s commitment to establishing smart drinking social norms to all sectors of society, to every corner of the globe.
“AB InBev believes that it is essential to create an independent implementation and monitoring and evaluation framework for our Global Smart Drinking Goals that is transparent, credible and delivers results,” the Company stated. “We will do this by providing grants to fund a global thought leadership and programme coordination body made up of independent academic, public health and/or policy institutions.”
The body will not only oversee and coordinate recognised experts and public health leaders but will facilitate the design, implementation, monitoring and evaluation of the Goals that these experts will oversee, before making the results publicly available.
“The private sector has the opportunity to play a valuable role in addressing pressing societal challenges. Governments can't do it alone,” said Former Prime Minister, Jean Chrétien, Chairman of AB InBev’s Global Advisory Council. “AB InBev is demonstrating its leadership by seizing this opportunity to tackle harmful alcohol use globally over the next 10 years.
“Their Global Smart Drinking Goals have the potential to make a positive impact on people, families, and communities across the world.”
The unveiling of China - or more specifically, Shanghai - as one of the six locations set to drive AB InBev’s corporate social responsibility initiatives around the world bookends a year which began with the announcement that the Company was looking to drive even further revenue growth from its Chinese footprint, confirming the country as arguably the most pivotal to the brand’s future development.
Forming around 95 percent of the Company’s Asia-Pacific volumes, the country is undeniably a regional flagship, but with fluctuating success in its core European and US markets, the opportunity to grow revenue-per-unit levels in China is a prospect too lucrative to ignore for the global market leader.
“China’s beer market overtook the US in terms of volume sales in 2002, and is almost twice the size presently,” explained a Forbes report earlier in 2015. “High popularity of cheaper beer has kept revenue growth for the Chinese beer market in check, but with growing disposable incomes and new beer launches in the premium segment by widely available and large breweries, consumers could be persuaded to trade-up from the value beer brands.”
Overall, the value of the Chinese beer market is expected to rise by 45 percent by 2017 - from 2013 - overtaking the US in terms of net beer revenues, and naturally making it the place to dominate for a global business the size of AB InBev.
While seemingly an obvious and inevitable shift of focus, it will still be a significant one in general market terms, despite the size of AB InBev.
At present, 90 percent of the Company’s valuation comes from the Americas, with only five percent emanating from Asia-Pacific; emphasising the seismic transformation that befalls the Company if it is to establish China as a more even protagonist within its global remit.
However, with beer consumption rates falling in the US and scarce opportunity for further growth in what can widely agreed to be a done-and-dusted market, there will never be a better time to capitalise on the likes of South America, Africa and Asia-Pacific’s epicentre - China - over the next few years.
In contrast to the US, industry trends in China seem prime for such a strategy too, with the previously engrained model of a few select, large breweries completely dominating the market coming under threat from the potential of microbreweries; a shift that was seen in North America long ago.
The possibility of mergers and acquisitions infiltrating AB InBev into China’s consciousness is now therefore a very real possibility as it adjacently continues to expand its distribution network and conduct extensive marketing campaigns.
Purchases of Harbin Brewery and Fujian Sedrin Brewery in 2004 and 2006, respectively, induced early sparks, which turned into a more concerted fanning of the flames in 2013 when the Company acquired four breweries in the country; accounting for a net beer capacity of more than nine million hectolitres and subsequently making a statement far removed from its traditional, organic continuous improvement strategy in China.
All-told, AB InBev now enjoys around a 16.5 percent market share in China - a significant rise over the past 12 months alone - forming a starting point for what promises to be a thirst-quenching - and ethically-driven - revolution for the world’s leading brewer in the world’s most populous country.
Read this story, and more in December's issue of Asia Outlook here.