How Heineken took advantage of the beer market in China

The brands of Western consumers in China have long been reconciled with the possibility of low growth in the second largest economy in the world. But the demand for Hinken beer tells a different story.

In 2023, sales volumes of various brands for Dutch beer manufacturing, including Amstel, rose by more than 50 percent. Last year, as the Chinese public beer market shrinking the main righteousness, its sizes increased by approximately 20 percent to less than 700 million liters – which is almost enough to offer a liter for everyone in the country.

HeinkinGrowth growth comes after a deal agreement in 2018 with China Resources Beer, the largest beer factory in China, which has granted the rights of the state -owned brand group on the mainland while Heineken took a class in China Resources Beer and gets royalties from the deal.

The approach refers to the pockets of opportunities for foreign names known in the advanced consumer sector in China, even if the broader markets in which they work are saturated.

“This is a relationship of very healthy transactions,” said Tristan Van Strene, director of international investor relations at Heineken about the relationship with China Resources Beer. “They need us and we need them.”

Ewan Mellish, an analyst at Bernstein, said that Hinken growth rates “have undoubtedly outperformed.” “None of the other distinguished brands spoke about double numbers.”

Chinese public beer market decreased. Sales decreased by 4 to 5 percent last year amid concerns about consumer confidence.

But for China Resources Beer, whose sales decreased by 2.5 percent in 2024, Heineken is cap.

A deal with Hinkken gave the Dutch beer in China for a period of 20 years, in exchange for a stake in one of its holding companies that give Heineken an effective interest of about 21 percent in Beer Resources China.

Al -Jaa, which was previously sold in two southern provinces, was launched throughout the country. The growth was rapid, with the help of juvenile care such as the large Shanghai Formula 1 race in March, when 500 ml of the front was for sale for 40 yuan ($ 5.5).

The share of 500 ml of Heineken in China is on average on average 12-12 yuan (1.67-2.08 dollars), according to Morningstar, although prices vary greatly across regions and from bars to stores.

“The benefit of the distribution network at China Resources Beer”.

Beer Resources China, which is considered the most selling local snow, uses Heineken to pay China“The excellent market – which is often defined as beer that cost at least 20 percent more than average.

“The size of the total beer in China is a gradual decline,” said Tsang.

Heineken’s growth, from a low base, contrasts with other western brands, which generally placed itself as distinct options in China.

The Danish company Brewer Carlsberg, which has about 10 percent of the beer market in China, said that sales are 1 percent less last year. Jacob Arob AndersenLast month, the CEO said that the market “decreased structurally” for 15 years, but there are still “abundant growth opportunities.”

Anheuser-buschBudweiser owned, which, unlike HEINEKEN, built a large distribution network in China, and also reported its decrease in sales.

In reference to the excellent market that is still sophisticated, Mcleish said that the competition between the two “is seen as the death match of each of the celebrities in the mind of many investors.”

It now takes only 37 minutes of work for ordinary Chinese to save 500 ml of the distinguished beer, as Bernstein estimated, compared to more than an hour ago a decade before – close to the global definition of the ability to afford costs.

“The excellent beer tends to work well”: “We are thinking of 20 years of courses, and this is the distinguished development course that occurs in China.”

“You are not talking about huge capital expenses for someone to achieve a nice social evening.”

For MCLEISH, the China Resource strategy is a risk to the “brand mode” if the rapid expansion has a negative impact on the price and its outstanding condition.

He said that Beer Resources “did not really enjoy building distinct brands” but “if they took their time … growth rates were almost quickly.”

Kevin Lyong, director of investor relations at China Resources Beer.

There are other risks. Heineken’s exposure to the decrease in the share in Heineken resources to obtain a weak cost of 874 million euros last year, even with a sharp increase in its sizes.

The Dutch company does not reveal its profits and the income of the kings from the deal, but it said that its share of the income from Beer Resources China and its retreat from China is about 6 to 7 percent of net income in the world.

Van Sterene said that the sizes grew faster than 20 percent in the first quarter of this year, and in the same period, the sizes of its brand multiplied ASTEL.

Van Sterene said that the deal with China for resources “had no planned point.” “The truth is that the presence of local property is often good for us,” he said.