Like Many Expats, Bud Enjoys Being Big in China

They "tend to drink beer more often at restaurants, bars and other entertainment venues, and they like to consume large volumes over a short period of time."

That quote was not about beer consumption habits among US college students, but about those of the Chinese. Speaking to The China Daily, Carlsberg China CEO Stephen Maher described China's market for beer in that oldest of Chinese tropes: "a challenge and an opportunity."

One such opportunity is a familiar one to foreigners in China: the chance for a schlub to be a star -- just for being foreign. 

Not many in the west would ever describe Budweiser as a luxury beer brand, but in China, it's a premium label retailing for more than twice some of its competitors. A spokesperson for Bud parent InBev told Bloomberg that the "premiumization trend continues with double-digit growth and Budweiser is further consolidating its leading position within this segment.”  

For brands like Budweiser, Miller, Heineken and Carlsberg, China represents a booming growth industry where their brands are considered premium, luxury quality. It's a far cry from what's happening back home, where the thirst for craft beers have driven down Bud sales. Miller Genuine Draft recently launched in a few China test markets even as the brand lost US market share to smaller labels like Sam Adams.

Note to the big brands: Yes, the microbrew revolution is already hitting China.

Chinese drink about 44 million kiloliters of beer annually, nearly a quarter of the global total. And while China's per capita beer consumption is only half of America's, its trajectory is far more exciting. In the next two years, the China beer market is predicted to hit 458 billion yuan ($76 billion), an increase from 2009's 306 billion yuan ($51 billion). Better yet, as The China Daily pointed out,  while "the sector may have made up just 10 percent of overall sales in 2011 (a rise of 20 percent on the previous year)… it contributed almost 50 percent of total profit."

To corner this market, brands like Carlsberg have launched speciality labels for China. For example, Carlsberg Chill tones down the brew's bitterness and cranks up its youth.

Though Budweiser may be basking in its luxury label, the brand would be wise to be careful in its newfound status. In many ways, "luxury" has become a dirty word in China, where wealth disparity is a sore point. Iconic Chinese wine brand Mao Tai recently efforted to distance itself from a study that found it in the top of China's "luxury" brands. The nation's central authority also recently decreed that it would no longer pay for Party officials to use luxury foreign autos like Audi. (It's estimated a third of all Audi sales in China are to Party officials.)

Premier Wen Jiabao recently also announced that the state would no longer spring for "high end" alcohol for official events. In a nation where the state itself is the largest consumer, Bud and other brands would be wise to be a little careful not to find themselves using the luxury label too liberally.