Yasheng Group, which operates 121 subsidiaries in agricultural production as well as beverage and inorganic salt manufacturing, has conducted a series of coordinated research studies on fast propagation technology for low trellis cultivation, mechanised farming and harvesting, and has introduced a new and trendy variety of hops to its division.
"Through scaled field application we are able to produce a practical, low cost, and reliable technology in providing high quality hops for the national brewing industry," said Zhou ChangSheng, YaSheng Group chairman. "This will allow us to produce a wide-variety of hops with various aromas, high-acid levels, and thus forging a firm foundation for further international marketing for our products."
In 1999, Yasheng Group introduced substantial new varieties of hops from the USA, UK and Germany to encourage the development of a high quality, high yield variety to grow in China. The project has now been assessed by experts from Gansu Science & Technology Bureau, and Gansu Agriculture & Animal Husbandry Bureau, and has consequently passed an important technical appraisal.
"The main drawbacks of hops in China are that they are monotone in variety, bitter in aroma, with low-acid content," said ChangSheng. "So, we see the key for accession into the global market is to create a domestic renowned hops brand, with low cost and high quality for the growing international trend for a variety of aromas."
In 2002, China surpassed the US to become the world's biggest beer market by volume, and the country accounts for 16.9 per cent of world-wide consumption. While beer sales growth in Western Europe and the US is flat, the fast-growing Chinese market has become more important, and is consolidating as it attracts investment from global giants such as Anheuser-Busch, Heineken and Carlsberg Breweries.
Indeed, one could argue that China's fast-consolidating beer sector is being fuelled by overseas brewers rushing to take advantage of rising disposable income and consumption in China, where the country's annual market is growing by as much as eight per cent a year.
For example Heineken - a relative latecomer to the market - recently strengthened its foothold in the country with the acquisition of a minority stake in the Guangdong Brewery. Thony Ruys, chairman of Heineken, said: "Guangdong province is one of the most important beer markets in China. The strong position of Guangdong Breweries in this region offers an excellent platform for further growth of the Heineken brand."
The acquisition is the first by the newly formed Heineken APB, which the Dutch group said earlier this month would be used as a vehicle for the production and marketing of beer and other strategic activities such as investments, mergers and acquisitions in China. Heineken APB combines the Chinese activities of Heineken and Asia Pacific Breweries, Fraser & Neave's main brewing unit.
But local brewers are likely to survive the onslaught of western companies. Writing in FoodandDrinkEurope.com, Chris Jones suggests that it is likely to be decades before brews such as Budweiser, Stella Artois or Miller begin to make inroads into a market dominated by local brands, but they will at least be in a strong position to exploit these advances once they occur. Heineken, Carlsberg and others such as Scottish & Newcastle will have to take their pick of the smaller, less well-known breweries over the next few years if they want to be in a position to challenge their perennial rivals in the world's biggest market, but this will a laborious and potentially costly exercise.