Michel Doukeris, CEO of Fortune 500 company “AB InBev”, flew to Beijing on February 24, 2023, to visit China’s Minister of Commerce, Mr. Wang Wentao, as an early visitor to meet China’s central government after the lifting of pandemic restrictions in China. AB InBev is the parent company of Budweiser APAC and is a public company based in Leuven, Belgium and listed on Euronext which has over 600 years of brewing heritage and an extensive global presence.
This year marks the beginning of Chinese modernization. The past two months have shown good economic growth, which is promising for both consumption and investment in China. “China is the largest beer industry globally. China is such an important market, one of the top markets for us globally. It was only natural to me to come on in the year, to see how things are and have the opportunity to talk to the team. And I’m very glad to see how consumption is returning very fast.” said Mr. Doukeris. During his interview with Chinese media, Mr. Doukeris shared AB InBev’s strategic plans in China. This included progress toward carbon neutrality, sustainability and AB InBev’s ESG goals, as well as ways the beer industry can boost local consumption and economic revitalization.
Investments in China for Long-Term Growth
Mr. Doukeris emphasized China’s importance to AB InBev, noting that “one beer in four globally is consumed in China“. Since entering China in 1984, AB InBev has laid down significant roots in the country and invested more than 30B RMB (including direct investments and acquisitions). AB InBev brews beer at approximately 30 breweries across China and provides a diverse portfolio of more than 50 brands. AB InBev has also spared no efforts to fulfill its commitments to the Chinese market, while continually increasing its investment here.
In recent years, China has firmly and continuously implemented its “dual circulation” model in which domestic market is core with foreign investment to accelerate the growth and expansion. This aligns with the country’s commitment to high-quality economic opening following the 20th National Congress of the Communist Party of China. The growth of the middle-income population at the size of over 400 million and the ongoing trends of trading up and premiumization are good news to AB InBev which embraced premiumization at very early stage.
“We have been in China since 1984. Each and every time that the market is growing, that there is consumption, we need to keep up with the investment to grow,” said Mr. Doukeris. The listing of Budweiser APAC on the Hong Kong Exchange in 2019 has increased investment in China. For example the Putian Craft Brewery, the largest craft brewery of Budweiser China, started operation in July 2022, producing globally well-known craft beers such as Goose Island and Boxing Cat. It is also a base for its locally inspired craft beer brand “059 Coastline Craft” which combines local ingredients in Fujian such as Wuyi Mountain Da Hong Pao tea and FJ passion fruit.
AB InBev’s development in China was also fast-tracked last October when the beer industry was listed as an encouraged catalogue in the West and Northeast. AB InBev promptly invested to expand the brewery for the production of its three premium brands at its Ziyang plant, Sichuan province, by an additional 42,000 tons.
Expand Consumption to Accelerate Market Growth
China’s 2022 Central Economic Work Conference stated that relevant local government departments should prioritize recovery and expansion of consumption. China’s Ministry of Commerce also defined 2023 as the year of consumption-expansion with nationwide promotions to boost consumption and revitalize the market.
Shortly after arriving in Beijing, Mr. Doukeris and his team visited the market to see the recovery of consumption first-hand at local restaurants and pubs. Mr. Doukeris noted, “With the rise of ‘she economy’, healthy consumption and other market segments, AB InBev will continue to introduce more diversified and innovative products. We will create more consumption occasions while establishing connections with more consumers.”
Beer consumption is occasion oriented, creates more human interactions and strengthens connections among us—thereby playing an important role in boosting overall consumption in the market. “The beer industry is of huge significance in global economy.” said Mr. Doukeris, “According to a new Oxford Economics study, one out of one hundred and ten jobs is related directly and indirectly with the beer industry.”
Despite three years of global pandemic, being one of the Global Top 500 Enterprises, AB InBev has shown resilience and continued to inject confidence into the industry and market. Budweiser China plans to launch a public welfare program called “Cheers Campaign” in China at the end of March. The program aims to support small and medium-sized merchants to boost consumption and the development of the night-time economy with AB InBev’s “BEES”. It is a B2B digital platform which helps wholesalers cut costs and improve efficiency with its technology and professional supports.
ESG and Empowering Industrial Chains
The report to the 20th National Congress of the Communist Party of China highlighted that high-quality development is the first and foremost task for building a modern socialist country. As a sunrise industry with a market size of 400B RMB, the beer industry is speeding towards such development. Budweiser APAC’s goal is to become the “Most Loved High-Quality Growth Leader in Beverage” and has placed ESG at the heart of its strategy and operations.
AB InBev emphasizes that ESG is at the core of its business. Mr. Doukeris reiterated that “Beer is natural, inclusive and local”. According to him, the beer business can only be sustainable with healthy, prosperous communities and healthy, natural ingredients. Hence, AB InBev’s ESG strategy focuses on eight priorities including water stewardship, smart agriculture, circular package and climate action.
Budweiser APAC develops ESG breakthroughs through innovation and cooperation with market players and stakeholders of the upstream and downstream value chain. Its Nanning brewery sets a new industry benchmark with water efficiency of 1.11hl/hl; its breweries in Wuhan and Jinzhou are the first carbon-neutral breweries; and its Taizhou brewery is ‘Zero Waste’. Last June, MSCI ranked Budweiser China as an ESG leader with AA rating. Currently, AB InBev is incubating innovative ESG solutions through the 100+ Accelerator, Budweiser 100+ Innovation Hub, and the Supplier Strategic Alliance.
Hand in hand with the business partners, AB InBev leverages its resources and technology to empower the industrial chain and achieve shared prosperity in the communities where it operates. For example, the Wholesaler Excellent Program has already helped nearly 2,000 wholesalers nationwide reduce costs and increase efficiency. Budweiser China has also supported lychee farmers in Zhangzhou, Fujian Province, and lime farmers in Anyue, Sichuan Province, to explore new models of rural revitalization.
In the new journey towards Chinese-style modernization, foreign capital has increased involvement in China’s high-quality development. By accelerating investment deployment, consumption deployment and ESG, AB InBev has jumpstarted the growth of the beer industry with “three accelerators” and strengthened its determination and confidence to further grow the Chinese market.