Slumping at home, beer brands look to China

Beer me! Or, as they are saying in Ohio, "Yuengling Me!" The Dayton Business Journal reports that Ohioans have been gulping down so much of the Pennsylvania-made beer that D.G. Yuengling & Son is now America's largest brewer. (Suck it, Boston Beer Co.)

But Ohio boozehounds appear to be the outliers. Last year was a sobering year for beer sales, with shipments at their lowest level in the US since 2003. Global beer shipments flattened out by 2.9 million barrels, a drop of 1.4 percent from 2010. So brewers are looking to that same group everyone looks to for a bailout: China.

As the world's largest market for beer, competition is fierce, and comes from all sides. In addition to homegrown brands like Tsingtao and Yanjing, competitors from other nations vie for attention. Sinagapore's Anchor beer (not to be confused with America's Anchor Steamer brand) recently launched its 2012 Chinese New Year campaign with Korean superstar Rain—using the worst voice-over in the history of voice-overs (listen at your peril, at top).

Miller is test launching its Miller Genuine Draft (MGD) label in Zhezhang, China, a city just south of Shanghai. The brand plans to expand into the cities of Hangzhou and Wenzhou and well. Miller saw growth in China last year and is hoping to ride the momentum to introduce its premium MGD product.

Back in the U.S., meanwhile, beer sales are slumping. Shipments by Budweiser, Beck's and Michelob parent Anheuser-Busch InBev fell 2.9 percent. The U.S. sales drop was 3.9 percent for Heineken, at the same time the brand is retreating from China because locals reportedly find the taste "too bitter."

MillerCoors came in the middle with a 3 percent decline in U.S.. These drops came as smaller brands saw increases. The aforementioned Yuengling and Sam Adams brewery Boston Beer Co. saw respective shipment increases of 16.9 and 8 percent last year. Smaller craft brands saw even more explosive growth. Minnesota's Surley Brewing has gone from selling 800 barrels in 2006 to 17,000 in 2011. And it is just one local example that includes beer brands many have never heard of such as Fat Tire and Deschutes.

What's more, even in an economic downturn Americans are demonstrating a willingness to pay more for local and craft beer brands. After an 11 percent sales growth in 2010, last year's sales were on target for a nearly 15 percent jump. The consumer move toward craft brands is eroding the 75 percent market share held by Anheuser-Busch InBev and MillerCoors.

It's an overall trend that should leave the world's biggest brewers needing a drink. We suggest New Glarus Brewing's excellent Spotted Cow.