photo by Matthew Curtis
THE GIST
Anheuser-Busch InBev is hoping its Goose Island brand has the ability to fly high in China. The multinational conglomerate just this week launched a new brewery in the world’s number one beer market by volume. Located in Wuhan, the facility will focus its production on brewing Goose Island beers, as well as brands for two of its Chinese investments, Kaiba and Boxing Cat.
The new space is actually the second the company has opened in recent months. In December 2017, ABI began production in China’s Fujian Province, which includes capacity to package 160,000 cans per hour and brew 1.5 million tons of beer.
This latest move is guided by ABI’s disruptive investment arm, ZX Ventures, which explains interest in focusing on more premium brands in lieu of adjunct Lager. Until 2016, Snow, the best-selling beer in the world, was made under ABI’s umbrella of international businesses, but was sold off in the company’s merger with SABMiller.
[Disclosure: Good Beer Hunting's studio side is the Executive Producer of a Condé Nast project, October, in which ZX Ventures is an investor.]
Part of what cushioned the departure of Snow is the future of beer in markets like China. Only in recent years has non-macro Lager started to really take off in the country, and ABI has not been shy about its interest in capitalizing on that growing interest.
"China is one of those places where if you look at averages, you miss the picture," ABI CEO Carlos Brito told CNBC in December, later adding that his company was purposefully shifting attention from the “mainstream” market in lieu of premium and super-premium, where “those segments are growing very nicely.”
WHY IT MATTERS
Going back to 2015, it was clear that ABI saw China as a big part of the company’s future growth, noting the “Asia Pacific” region would, at the time, provide 53% of worldwide volume growth through 2025.
According to latest export figures reported by the Beer Institute, American shipments to "Mainland China" actually fell by just over 36% between 2016 and 2017. But much like the premiumization of beer in the U.S., higher-priced—and, in this case, foreign products—are within reach for a fast-growing middle class that sees them as desirable. According to global marketing research firm Euromonitor, retail sales of beer doubled in the decade between 2008 and 2017, amounting to roughly $80 billion U.S., about 75% of what Americans spent in 2016.
The economics of the situation are not lost on ABI. In early 2017, a report by Fortune showed just how important the market could be, highlighting pay-to-play practices that earned Goose Island taps amongst a weak regulatory climate. In the story, Fortune noted that Goose Island earned taps as its parent company supplied flow meters, supported special events and, according to one bar owner, offered straight cash for taps. Each example in the story ended with owners providing handles for Goose products.
In response to the piece, an ABI spokesperson said, “it is ultimately up to the wholesalers as to which beers they choose to carry.”
These practices are fairly unsavory to American beer lovers, bound to the drink they love through a three-tier system, but are common throughout the rest of the world. Legality aside, ABI’s choice to utilize Goose Island in the Asian market is part of a broader shift by many large breweries—craft or not.
Stone Brewing recently celebrated the one-year anniversary for its brewery in Berlin, and in December, co-founder Greg Koch traveled to China to, according to the brewery’s press release, answer the “impassioned cry of craft beer fans” for Stone beer. Brooklyn Brewery has six breweries or partnerships around the world to brew its own beer or various offshoot brands. Lagunitas, which completed a full sale of its company to Heineken last year, has long seen the international market as a pivotal part of its business.
In March 2011, DRAFT magazine quoted founder Tony Magee waxing longingly of selling his hoppy beers outside America’s borders, even considering creating his own brewery or arranging a deal with another. “The idea of craft beer going around the world—it’s going to happen,” Magee said at the time. “But we’re just talking about it now and it’s far into the future.” Magee went on to reference Scotland, Italy, and Germany as potential locations. After selling half his company to Heineken in 2016, he said the move was “about the world—beginning in Mexico.”
But these kinds of discussions—whether years ago, last year, or just last week—revolve around a bigger issue at play within America’s craft beer landscape: bigger brewers are simply having a tougher time as smaller, nimbler, and more community-focused breweries have come online. By the Brewers Association’s own metrics, breweries producing under 15,000 barrels a year are doing great.
This is also all before considering the growing international influence of IPA, which continues to impact brewer and drinker interest everywhere from Iceland to the UK. When it comes to understanding modern definitions of “craft beer,” especially when that phrase seems to run alongside the creativity and innovation occurring within the U.S., full-flavored options are more closely intertwined with hop-forward brews. The style may not have originated in America, but it has helped rocket the country toward the top of rating boards with insatiable drinkers all over.
Which is why a growing presence of Goose Island in China doesn’t come as much of a surprise as it does a natural progression of an unfolding story. It also presents an opportunity missed in America, where ABI bought its way into the craft beer craze, but didn’t get to set the tone of what it was—or could be, or potentially meant—to consumers. Getting involved now, and with immense financial backing, is a second chance of sorts on new turf. Beer sales are going north fast in the Far East, and ABI is hoping Goose Island will eventually lead the flock.
—Bryan Roth