Japan’s Asahi Group Holdings plans to return to the Chinese market to resume investments in the world’s largest beer market.
“We have been struggling since the first half of the 1990s. We made very large investments in China, but had to pull out a few years ago,” said CEO Atsushi Katsuki in an interview with CNBC’s Martin Sung.
“But finally, we were able to develop the right strategy for the Chinese market.”
According to Katsuki, the company left China a few years ago due to the lack of “premium products” and “very low” prices at the time.
In 2017, Asahi announced that it would sell its nearly 20% stake in the Chinese brewery to Tsingtao Fosun Group and its subsidiaries.
“But with the arrival of international brands, as well as craft beer, the premium segment in China is really taking off and growing significantly.”
“Asahi Super Dry already has the largest sales in the Chinese market, and it’s growing double digits every year, so we want to continue to invest in this premium market,” he added.
Katsuki said that while sales in China exceed all other markets, the U.S. beer market is “far and away the best market in the world.”
“The ideas that we can really bring out of the U.S. market, combined with the capabilities that we can offer from our R&D side, can really contribute to the well-being of our consumers,” he said.
Asahi Super Dry and Italian beer Peroni are among the company’s core brands.
High inflation in Europe remains a challenge
Asahi has 19 production facilities across Europe and has been hit by rising inflation in the region.
Last month, overall inflation in Europe was 7%, and Katsuki said he expects it to “remain on a high plateau” in the coming months.
High energy prices are driving up the cost of Asahi’s glass bottles, as glass production requires a lot of energy.
“So the fact that energy prices are rising can really affect the cost of glass, and we expect the cost of processing to rise further,” Katsuki said.
In the first quarter of this year, Asahi Group’s revenue increased by 7.9% year-on-year, and revenue in actual currency increased by 12% year-on-year.
“Although many uncertainties remain in the operating environment, especially in how global inflation may develop, we are confident in the resilience and growth potential of our business,” Katsuki said in the May earnings report.
Shares of Asahi Group Holdings are up more than 29% since the beginning of the year.