---
title: "AB InBev and Carlsberg's China Strategy: How They Captured Half of China's Beer Market in 20 Years"
description: "When expanding aggressively in the Chinese market, AB InBev's tactics have a somewhat 'cunning hero' quality. To build a new factory in a region, it negotiates with four or five cities, signs framework agreements, and then waits for these cities to bid against each other, with the most favorable policies winning. Before the final announcement, no one knows what AB InBev is up to. When AB InBev planned to enter Hebei, it negotiated with Shijiazhuang, Zhangjiakou, Langfang, and Baoding simultaneously, ultimately choosing Qingyuan in Baoding. The same pattern was used in Hunan, Jiangxi, Yunnan, and other regions."
author: "杨伟"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-07-31"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/WSvVEXSkyeqC2IVZoPmfbQ"
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# AB InBev and Carlsberg's China Strategy: How They Captured Half of China's Beer Market in 20 Years

> When expanding aggressively in the Chinese market, AB InBev's tactics have a somewhat 'cunning hero' quality. To build a new factory in a region, it negotiates with four or five cities, signs framework agreements, and then waits for these cities to bid against each other, with the most favorable policies winning. Before the final announcement, no one knows what AB InBev is up to. When AB InBev planned to enter Hebei, it negotiated with Shijiazhuang, Zhangjiakou, Langfang, and Baoding simultaneously, ultimately choosing Qingyuan in Baoding. The same pattern was used in Hunan, Jiangxi, Yunnan, and other regions.

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When expanding aggressively in the Chinese market, AB InBev's tactics have a somewhat 'cunning hero' quality.
To build a new factory in a region, it negotiates with four or five cities, signs framework agreements, and then waits for these cities to bid against each other, with the most favorable policies winning. Before the final announcement, no one knows what AB InBev is up to.
When AB InBev planned to enter Hebei, it negotiated with Shijiazhuang, Zhangjiakou, Langfang, and Baoding simultaneously, ultimately choosing Qingyuan in Baoding. The same pattern was used in Hunan, Jiangxi, Yunnan, and other regions.
This may be related to the somewhat wild business style of the Americas. But Carlsberg, nestled in the Nordic fairy tale world, has a completely different expansion style in China: recognizing the current situation, seeing trends clearly, enduring humiliation, and making steady progress.
If AB InBev is the 'Cao Cao' of the beer world, then Carlsberg can be called the 'Sima Yi' of the beer world.
Many beer giants covet the Chinese market, but Heineken is lukewarm, Asahi is not progressing smoothly, and only AB InBev and Carlsberg have successfully squeezed into the top five, aiming for the 'Iron Throne' of China's beer industry.
Although AB InBev and Carlsberg only hold about 20% of the Chinese market share, they dominate in multiple regional markets and capture most of the profitable high-end segment, so it is no exaggeration to say they have captured half of China's beer market.
Truly, it is now time for foreign beer companies to make China Resources Snow, Tsingtao, and Yanjing 'tremble'. If the rumor that Carlsberg will take over Asahi's stake to become the second-largest shareholder of Tsingtao Brewery comes true, this fear may dominate the second half of China's beer industry.
**M&A Maniac AB InBev**
Calling AB InBev the 'Cao Cao' of the beer world refers not only to its 'cunning' but more to its ambition and boldness in building its empire.
A Belgian beer company, it merged with AmBev in 2004 to form InBev, acquired Anheuser-Busch for $52 billion in 2008 to become the world's largest beer company, and acquired SABMiller, the second-largest, for $106 billion in 2016. It owns hundreds of brands including Budweiser and Corona.
Although AB InBev's headquarters is in Belgium, it is more accurately described as an American company.
AB InBev's advancement in the Chinese market has accompanied its global expansion.
The reason the company is abbreviated as 'AB InBev' is the 2008 merger of InBev and Anheuser-Busch. After forming AB InBev, the two beer giants' layouts in China were combined into one force, immediately entering the top five in China's beer market.
Previously, InBev's sphere of influence in China was mainly in the east, in Jiangsu, Zhejiang, and Fujian. Over ten years, it acquired Santai and Jinling in Jiangsu, Shuanglu, Shiliang, and Zhedong in Zhejiang, as well as Jinglongquan in Hubei and Changsha in Hunan. After Anheuser-Busch acquired Harbin Brewery, its main business was in the northeast.
At this point, AB InBev's 'Eastern Front' began to take shape. After the merger, not only was there more 'ammunition' for acquisitions, but the 'deterrence' against local Chinese brands was stronger.
In markets coveted by the giants, local brands either 'surrender or be killed', with the only choice being to sell to A or B.
Those sold to Snow can only retain production capacity and channels; those sold to AB InBev and Carlsberg can keep their brands, but they become foreign-owned.
After that, AB InBev's acquisitions in the Chinese market never stopped: in 2011, Henan Weixue and Dalian Daxue; in 2012, Mudanjiang Brewery; in 2013, Hebei Tangshan; in 2014, Jilin Jinshibai; in 2015, increased stake in Zhujiang Brewery (002461.SZ)...
In 2015, when AB InBev was preparing to acquire SABMiller, it even had designs on China Resources Snow. SABMiller held 49% of China Resources Snow. If not for the 'antitrust' investigation, AB InBev would never have given up on becoming the 'leader' of China's beer market.
Currently, AB InBev ranks third in China's beer market, behind China Resources Beer (00291.HK) and Tsingtao Brewery (600600.SH). In addition to the main brand Budweiser, which follows a high-end route, national brands Harbin and Sedrin, along with dozens of local brands, target the mid-to-low-end market.
Maybe you drink Budweiser every day, but if you don't look carefully, you won't even notice.
It is said that AB InBev does a major acquisition every four years. Who knows who the next 'prey' will be, and what impact it will have on China's beer market.
**Carlsberg's Secret Maneuver**
Many people wonder: the best beer is in Europe, the highest per capita beer consumption is in Europe, and the birthplace of the beer industry is in Europe, but the largest beer companies are not in Europe.
A key reason is that Europeans know how to brew, innovate products, and perfectly align marketing with consumer pain points, but in capital operations, they are not as skilled as Americans or Brazilians who have long been battle-tested in the business world.
The close connection between beer and football should thank Carlsberg for sponsoring the European Championship for over 20 consecutive years. Even now, Carlsberg's football marketing hits consumers' excitement points every year. Carlsberg has also brought its excellent football marketing to China.
'Probably the best beer in the world', this Carlsberg slogan was adapted by Luo Yonghao for his own use: 'Probably the best phone in the Eastern Hemisphere', but that was decades later.
In fact, Carlsberg entered the Chinese market two years earlier than AB InBev. But this 'steady' style determined that when advancing in China, Carlsberg first chose the less competitive western market.
In 1995, Carlsberg acquired Huizhou Brewery to enter the Chinese market. In 2003, it adjusted its strategy, fully acquiring Yunnan's Huashi Brewery and Dali Brewery, supporting local brands.
In the following years, it focused on joint ventures, successively investing in Tibet's Lhasa Brewery, Xinjiang's Xinjiang Brewery and Wusu Brewery, Lanzhou Yellow River, Ningxia Brewery, and finally taking control of Chongqing Brewery.
Unconsciously, Carlsberg controlled the entire beer landscape of western China and is now preparing to make moves in the east, gradually implementing its west-east-central strategy.
If AB InBev and Snow's acquisitions in the east carry a hint of 'threat', then Carlsberg in the west more often plays the role of 'external aid', sometimes even 'savior'.
The western consumer economy is inherently behind the eastern region, and what Carlsberg brings to local brands is world-class beer management and operation experience.
Not to mention revitalizing Chongqing Brewery (600132.SH), cleaning up Hops (now Tongjitang, 600090.SH), and saving Wusu Brewery by selling its shell. More importantly, it has carried out bold reforms in balancing the entire western beer resources.
When Carlsberg closed several factories of Chongqing Brewery, the entire industry was shocked. Media and analysts even shouted 'Carlsberg is running away', and Carlsberg felt wronged.
But looking back, the giants that were slow to reduce capacity now find it a bit difficult.
During the volume-driven stage of the beer industry, western breweries couldn't keep up, but in the stage of high-end and quality upgrading, these manufacturers, led by Chongqing Brewery, may recover first in the industry downturn.
Think of Sima Yi: breaking his legs, betting on Cao Pi, outwitting Zhuge Liang, walking on thin ice, and ultimately laying the foundation for a dynasty. This bears some resemblance to Carlsberg's advancement in China.
**Source: Zebra Consumption (ID: banmaxiaofei)**
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