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Savings Experiment: Snow RemovalAnheuser-Busch (NYSE: BUD) has become the latest in a very long line of large U.S. public companies saying that the future is in China. To make U.S. firms a big success, the Chinese will have to eat a lot of McDonald's (NYSE: MCD), drink a lot of Starbucks (NASDAQ: SBUX), and shop all day and all night at Wal-Mart (NYSE: WMT).
The boys at BUD say that their overseas sales are only 10% of total sales, but that the figure is growing faster than it is in the U.S.. However, that may be due to the law of large numbers. BUD's sales outside the U.S. are so small that they should be growing.
Since India is the other huge developing country outside the U.S., BUD does not want to neglect it when mentioning its plans. Reuters quotes management as saying: "We have a very long-term involvement in China, and India is the only other Asian country besides China where we have invested in a brewery."
Whether the Chinese want to drink beer that is made by outside brewers is not something that will be known for a while, but BUD does face competition from local companies and all of the major beer firms in Europe.
If the Chinese are willing to drink a case of beer per person, the whole thing may just work.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
7-07-2007 @ 7:13PM
Michael Schneider said...
While visiting Taiwan several years ago, I noted the McDonald's in Taipei does a huge business and like many American style places in Europe gets some benefit actually from being an Western company-- Western in cool in some avenues of life particularly in areas associated with pop culture and entertainment. Beer has gotten more popular in China but it isn't originally a Chinese passion- they got this from the Russians. Budweiser, I think, should do fairly well there relative to local beer companies as long as there isn't anything like a big trade war. Our economies are becoming more interconnected and Chinese know they are benefiting as well as the West is.
For some insight into the Chinese beer industry see reviews of Mr. China posted at http://www.Barreloworld.com. Also Jim Rogers presents a positive outlook on China in his latest interviews (one just posted and one on the way) available in the (yellow label) Channeling Jim Rogers section at http://www.Barrelomoney.com.
7-23-2007 @ 11:24AM
Paul Michaels said...
This article is not very well informed. The Chinese are already buying Budweiser beer. You make it sound as if they have never heard of Bud, or other foreign beers. They sell Heinekin and Guiness, and even Pabst.
paul@bakerdavis.com
7-08-2007 @ 6:44AM
Steve said...
I think the Chinese will enjoy a Corona before they enjoy Buds.
http://www.smctrader.com
7-09-2007 @ 7:27AM
douglasamcintyre said...
BUD has less than 10% of its sales overseas. They are making a large new investment in China and India. The point is that their current market penetradion in these countries is tiny.
7-30-2007 @ 2:22PM
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