Imagine a beer market where no single firm supplies more than 4% of the national demand. Imagine a country with thousands of regional brewers, a fragmented market with high transportation costs and a strong attachment of the consumer to the local brew. Well, that market could be the Chinese beer market in 2000 but it is in fact the American market in 1933 ! The American market got concentrated in only 40 years , some brewers managed to gain a national status, gradually took the lion's share of the market and squeezed the marginal players. And in that race to reach the efficient size and to gain market shares, Anheuser-Busch took the lead.

In China today, the same process is on the way. The growing Chinese market with a 15.7 % world market share is expected to outperform the US market within a few years. The thirst for beer is growing far faster in developing countries such as China than in traditional beer markets. Faced with a slowing down demand in mature markets, the big brewers are now racing to settle in the emerging markets and to strengthen their international positions, and in that context, the ability to settle in China, the world's most promising market, gradually became a main stake. Since the beginning of the 90s, foreign investors have been pouring money into the premium market which is only about 5% of China's beer market but that has more than trebled between 1994 and 1998. But there is too much capacity in the market and many occidental companies have over-invested in China. After a period of heavy investment some companies are beginning to look for ways to stem heavy losses or to increase sales. It seems nevertheless that these over-capacities are only a short-term issue and that the companies that will be able to stay in the market will be highly rewarded.

What are Anheuser Busch's strategies to set up Budweiser® as the first national beer brand in that highly competitive market ?  The study of the " steamroller strategy " of Anheuser Busch for a century in the United States gives a clearer view of what the company tries to do on the Chinese market. Similar methods for similar markets ? It seems so. Three main axes of Anheuser-Busch strategy can be noticed. The first one is the ability of Anheuser-Busch to innovate and to set up and strictly control advanced production systems and distribution channels. The second axe is to develop massive advertising campaigns to drown the consumer in Budweiser® and the third one is to pursue a tradition of broad " civic " involvement.

However, Anheuser Busch should also be able to adapt this " steamroller strategy " to the Chinese market to really benefit from the whole potential of that country. New ways of thinking have to be explored. The Chinese culture and Anheuser Busch's culture of entreprise have indeed a lot in common : a strong sense of hierachy, centralised decision processes, a familial and patriarcal governance, a civic involvment in the society. To engage a process of vertical integration in China as it has been done before in the US would also be a good way to improve profitability and to control the quality from the raw materials to the distribution channels. Besides, Anheuser Busch should try to move towards a new " Think local, Act local " attitude to gain responsiveness to consumers' demands.
 
 

Part 1- General presentation : Anheuser Busch and the Chinese business environment.

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