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Budweiser APAC bets on post-COVID China demand for premium beer

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In response to a rebound in demand following the lifting of the nation's COVID-19 limits, Budweiser Brewing Co. APAC, Asia's largest beer firm by sales, announced that it will expand into more Chinese cities with its premium goods.

China abruptly abandoned its rigorous zero-COVID policy in December. This prohibition had been in place for three years and had negatively impacted sales at pubs and restaurants, where Budweiser makes a disproportionate amount of its money. According to Budweiser, its market share in China decreased by 44 basis points last year and overall volumes dropped by 3%.

"(In China) this quarter we really see strong signals for recovery in the market which is fully opening," Jan Craps, co-chair and chief executive of Budweiser APAC, said in an interview after the company reported annual results.

Anheuser-Busch InBev's Asia-Pacific division hopes to sell at least one million litres of its premium Budweiser brand in 220 Chinese cities this year, up from 201 last year, and to sell 60 million litres of its "super-premium" brands, such as Hoegaarden, Blue Girl, and Corona, in 60 cities this year, up from 51 last year, according to Craps.

The premium sector, which currently makes up 16%–17% of the total beer market in China and is expected to increase in size, is where Budweiser APAC, which has more than 50 brands, is banking its hopes for expansion.

"We believe in the next ten years there is big growth potential here," Craps said, citing the 40 per cent-45 per cent market share of premium beer in developed markets.

Based on a study by SPDB International, Budweiser Asia has more than 40% of the market share in China for high-end and above products.

China's top rivals, including Tsingtao Brewery, China Resources Beer (CR), and Beijing Yanjing Brewery, have recently introduced new, more expensive goods that are aimed at younger customers.

As per Citi analysis, China's premium-segment growth's recovery will have a significant impact on the company's growth in 2023.

Food and beverage analyst Zhu Danpeng, who also serves as deputy head of the Guangdong Provincial Food Safety Promotion Alliance, claimed that the premium beer market in China has entered a phase of rapid expansion.

"The whole market is growing larger in scale and Budweiser APAC will grow as the leader of this segment," Zhu said.

As a result of the post-COVID consumption recovery in South Korea and India, which partially offset the impact of widespread restaurant and bar closures in China, revenue for Hong Kong-listed Budweiser APAC increased by 2.4% to $6.48 billion in 2022.

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