China's Snow is Like Water - and Now It's Bigger Than Bud

The self-styled king of beers has been toppled by a drink from China that most Budweiser lovers have never heard of: Snow.

While beer consumption is on the wane in developed markets such as the UK, the Chinese are developing a taste for home-grown lagers - lifting Snow to top spot - and there is plenty of scope for growth in a country of 1.3 billion people.

Average annual beer consumption in China is about 28 liters a person and that is rising fast, but still way behind the UK's average of almost 100 liters a person and about 70 liters in Japan.

Last year, Bud Light sold 5.18bn liters - about 9bn pints - while Snow sold 5.12bn, according to the industry statistics provider Plato Logic. In the first nine months of this year, Snow has sold 5.1bn liters, according to the third-quarter results of the company that makes it, China Resources Snow Breweries (CR Snow). And while sales of Snow are growing at about 20%, those of Bud Light, according to industry estimates, are down in its biggest market, the US, for the same period.

As a result, Snow is believed to now be bigger than Bud Light and its position at the top of the global booze league is likely to be confirmed at the end of the year.

It will mark a meteoric rise for Snow's brewer. Since it was founded in 1994, CR Snow has grown from a regional brewer with a single plant, in Shenyang in the north-eastern Liaoning province, to one of China's biggest drinks companies.

CR Snow is a joint venture between China Resources Enterprise and the UK-based brewer SABMiller, owner of Grolsch. It now has more than 30 brands and about 60 breweries in China. It remains to be seen how much of an export market there is for Snow. Reviewers at the monthly beer magazine BeerAdvocate rated it "D", describing it as "unimpressive" and "extremely drinkable, like water".

But its accession to the throne marks a significant success for SABMiller. A lot of western firms went into China in the 1990s and built breweries, expecting to make a killing with their premium brands. They met with limited success because price is critical in a place where almost one person in five lives on less than $1 a day. A 640ml bottle of Snow costs about 30 US cents and the premium beer sector is only about 2% of the Chinese market.

Most Chinese drinkers are sticking with local brews. China has a few super-brewers such as Beijing Yanjing and Tsingtao and western companies are getting involved with local partners as they look to offset slowing growth in more mature markets.

This month, InBev, which makes Stella Artois and Beck's, said the UK was among its worst-performing markets, with sales volumes down 5.3% in the three months to September. That followed gloomy statements from Molson Coors, maker of the UK market-leading lager Carling, and Carlsberg, which both noted a marked slowdown in British beer drinking.