Chinese Factory Caught Packaging Black Market Bud

Austin Ray

THE GIST
Earlier this month, Chinese authorities raided a factory found to be producing counterfeit beer at a reported rate of 600,000 cartons per month to be distributed to bars and nightclubs. The story picked up wider traction outside the country this week, though, when video surfaced depicting just how the black market brew was being made. And it’s quite gross: in the clip, a group of women can be seen hand dunking Budweiser cans into an open plastic bucket of beer before passing said cans down a conveyor belt to be capped off.

The whole operation reveals the black market as both shoddy and unsanitary, even by the standards of the laziest home brewer you know. But it also made clear that some of the Budweiser that Chinese drinkers have been consuming is clearly not the same Budweiser the company wishes to market.

WHY IT MATTERS
Reached by GBH, an Anheuser-Busch InBev spokesperson says the company has been working with local authorities to shut down the “small-scale” counterfeiting operation, adding it “takes great care in every detail of its product and packaging.”

“Cheap counterfeits have telltale signs that they are fakes,” the spokesperson continues, “such as imperfect seals, improper date coding, product name and text that have errors, and poor quality packaging and graphics.”

Of course, this clarification wasn’t enough to quell the inevitable schadenfreude many would find in such a video. But it was no laughing matter for AB InBev: China is hugely important for the world’s largest brewing conglomerate, as Fortune estimates it controls roughly 16% of the nation’s beer market—a beer market that has previously been pegged as the world’s largest.

Furthermore, the company is clearly positioning itself to be a leader in quality in the country, where Goose Island, arguably the flagship of AB InBev’s High End portfolio, has been expanding of late. Indeed, this past March, Fortune reported that peddling craft "is central to AB InBev’s strategy of promoting pricier beer to China’s growing ranks of wealthier young consumers.”

But you don't even need to go to the High End to feel this impact. Contrary to the brand's reputation among the craft-loyal segment here in the U.S., Bud is largely considered a premium beer in China, making it a prime target for this sort of counterfeiting.

It doesn’t take a magnifying glass to see how a video like this might rub against the company’s efforts to emerge as the pre-eminent purveyor of higher-cost, higher-quality libations in the country. And given the company’s concerted efforts to grow its craft brands in China, we asked if it had any knowledge that this type of counterfeiting is affecting any of its other brands, like say, Goose Island. The company responded with a boilerplate statement, leaving our specific line of questioning unacknowledged for now.

So for our Chinese readers: if you happen upon a Goose IPA that tastes unfortunately of factory hands, please do drop a line.

—Dave Eisenberg