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SABMiller (SBMRY) on the challenges of China's beer industry (conf call quotes)

Jun. 15, 2005 7:00 AM ET
Ezra Marbach profile picture
Ezra Marbach

SABMiller (ticker: SBMRY.pk) CFO Malcolm Wyman discussed the beer industry in China during his company's latest earnings results conference call. Here are some key quotes:

....we've been there now for I think 11 years.

....the beer industry in China is way behind in levels of sophistication....you're talking about what perhaps the U.S. or other industries might have looked like 50 to 80 years ago when you have total fragmentation across the country. When we entered you had over 800 breweries we are now down to I think just under 400 breweries.

…. there are so many cheap beers that those are definitely not brandable. We try and move our beers up into the upper mainstream and the local premium levels where you can get slightly better margin

....but if you take the vast amount of beer and if you take your normal pyramid -- probably from two thirds and down is all very much low quality, low-priced beer and that beer is certainly lacking in any sort of brand capacity. So the focus is much more on upper level of the pyramid where over time by consistency of the beer, consistency and quality and by making sure that the packaging is starting to look a little bit more attractive you can actually start developing some form of following for your brands.

(Quotes are from the CCBN StreetEvents transcript.)

Comment: Recently, Anheuser Busch (ticker: BUD) has been increasing its presence in China. See here for a management interview with Business Week, and here for an overview of BUD's activities in China from The Wall Street Journal.

This article was written by

Ezra Marbach profile picture
Ezra Marbach is a former investment banker who lived in Beijing in 2002-03 where he studied Mandarin Chinese and worked for a venture capitalist. Ezra previously worked for Internet-based venture capital firm UniversityAngels.com. Prior to that, he worked in the corporate finance department of Gerard Klauer Mattison, a NY-based boutique investment bank. Ezra graduated from Cornell University.

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