With Beijing reporting a falling growth rate and swelling support for protectionist policies in Washington, some worry that China’s boom days may be numbered.
But not Carlos Brito.
The Brazilian CEO of beverage conglomerate Anheuser-Busch InBev — nicknamed the world’s “king of beer” for the number of top suds brands he controls — says by focusing on China’s top earners there are still great business opportunities in the Middle Kingdom.
“The country is growing at [just under] 7% but that again is just an average,” Brito told the Fortune Global Forum in the southern Chinese city of Guangzhou on Thursday. “If you look at some parts of the population — the high end — and what they are consuming [growth] is going way ahead of that.”
Targeting China’s burgeoning middle class is a philosophy that Anheuser-Busch InBev adopted upon entering the Chinese market a decade ago. Today, it’s the top brewer across the world’s most populous nation, with 20% market share in total but, crucially, more than 60% for high-end brands where profit margins are higher.
“We bet that the demographics in China would change in such a way, with the middle class growing, that consumers would tend to trade up,” Brito told Time Inc. COO Alan Murray in an on-stage interview. “We’re still very bullish that there are many ways to continue to ‘uptrade’ consumers. You can go from mainstream to mainstream-plus; you could go from premium to super-premium; you can go to prestige.”
But that alone is not enough. More affluent consumers are also increasingly sophisticated, demanding value-added products. Brito says his focus is on pairing brands with globally popular entertainment — including sponsorships for sporting events like the FIFA World Cup and Wimbledon — but also some with a uniquely Chinese appeal, such as live streaming music events. He points to his partnership with the Belgium dance music festival Tomorrowland which saw 70 million Chinese tuned into last year’s online broadcast.
“People look for more than products, they look for experiences,” he says. “So it’s very important to provide consumers with entertainment where beer, beverages and food is at the center of it.”
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But it is also important to have a wider message for both attracting top talent and also to generate a wider identity for your brand. Brito points to Stella Artois’ clean water campaign, Corona’s fight to conserve beaches and oceans, and Budweiser’s efforts toward responsible consumption as examples. And there are business benefits: 240 million people viewed Budweiser’s promotional video on the importance of designated drivers that featured Chinese basketball legend Yao Ming.
“Today, consumers want you to have products with innovation and added value, but they also want to know what you stand for,” he says. “Chinese talented people want to join a company where they see a purpose.”
And not only is China still ripe for generating profits, but Brito says engaging in the rapidly evolving marketplace can actually help other areas of a business.
“When I started ten years ago in China, China was always absorbing best practices from elsewhere, and they had no problem learning from others,” he said. “But now China is now exporting best practices. So it’s a big shift.”
