Kingway to boost sales to 1.2m tons by 2008
By Zhang Jin and Chen Hong (China Daily)
Updated: 2005-08-25 09:13

Kingway Beer, a leading regional brewer in South China, said it plans to push sales up to 1.2 million tons by 2008 from 400,000 tons at the end of 2004, in a bid to become a national player in China's segmented and cutthroat beer sector.

"We have positioned ourselves as a national beer maker," Chairman Ye Xuquan told China Daily. "(Therefore), the first thing Kingway should do is to increase our sales in various cities outside Shenzhen."

The highly fractional Chinese beer market has undergone a series of mergers and acquisitions, with national and regional players such as Yanjing and Tsingtao actively delving into competitors' traditional marketplaces.

"The competition between beer makers is becoming fiercer," Ye said. "But we are confident Kingway could survive and grow in the new tide of market consolidation."

The brewer, which has dominated Shenzhen's market for almost ten years, has built a brewery in Shantou of South China's Guangdong Province that is able to produce 200,000 tons of beer annually. It is also building breweries in Dongguan, Tianjin and Xi'an, to begin production in November, next March and the end of 2006, respectively. Before these moves, Kingway's two breweries were all based in Shenzhen.

"We will not halt our expansion pace ... especially in affluent areas," said Ye, hinting that Kingway intends to set up a brewery in East China, the only one of the nation's three economic engines that the company has not tapped.

At present, the brewer has occupied a market share of less than 1.5 per cent in China, far from the industrial leader Tsingtao, which sells 12.8 per cent of the country's beer.

Ye also said Kingway has sufficient capital to support its national expansion plan. "We don't borrow from banks or any other sources. Our own capital has been enough for setting up new plants."

Aside from the establishment of more breweries in the nation's major marketplaces, Kingway will compete on the technological side, Ye said.

"Kingway has been committed to producing health and green beer," he said, explaining that the brewer does not add any formaldehyde (a potentially cancer-causing chemical) to its beer. "All of our more than 30 products have gained the labels of 'green food' by the government."

 With increasing awareness about food safety and health care among the public, Kingway's "green beer" concept could help it win the hearts of more consumers.

The recent heavily reported rumour that some domestic bottled beer contains high levels of formaldehyde has prompted national quality assurance watchdogs to prove that Chinese beer is safe to drink. Kingway, with its non-formaldehyde brewing technique, gained the favour of many new drinkers during that debate.

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