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Taiwan vs Tsingtao: Beer
wars
By Michael Taylor
TAIPEI
- It's a typical Friday evening at Papaya, an evening
restaurant on Nanjing East Road in Taipei. Across the
smoke-filled room, bleary-eyed office workers celebrate
the end of the workweek over seafood dishes, fried tofu,
and cries of "ganbei!" ("dry glass!"). In Taiwan,
this is not an option - and as the beer goes down,
inhibitions fall away along with the frustrations of the
workweek.
Of course, hard-working people
unwinding over a few beers is hardly an unusual event in
many countries. Taiwan's beer consumption, at about 26
liters per capita every year, is in line with the global
average. And like the major markets, it is slowly
contracting as public drunkenness gradually sinks into
social unacceptability - and Taiwan's law-enforcement
authorities toughen up what in years past had been
rampant drinking and driving.
Yet Taiwan's beer
market is far from dull. It provides an interesting
snapshot of the overall liberalization of Taiwan's
economy over the past decade or so. By far the dominant
label remains the ever-popular Taiwan Beer, a lager
brewed by the government-owned brewer that until last
year was an actual government agency. Fueled by a craze
for Japanese brands in the mid-1990s - as well as a
short-lived popularity for imported dark beers - the
total market share for imports peaked at roughly 30
percent in 1997, after which many tipplers went back to
the local brand. "Of course I drink Taiwan Beer," says a
Taipei food-stall patron. "I'm a Taiwanese."
That commonly held attitude probably stems from
before 1987, when the monolithic local brand was the
only legal choice. Longtime observers say the bland
packaging belied a frequently alarming variety of
flavors in the containers. "The old breweries were not
built for quality," says an international businessman
involved in capital equipment sales. Corrupt officials
were more interested in kickbacks than decent beer, he
says, adding that the low-bid brewing equipment the
government purchased did not bottle the beer properly:
"In the old days, you'd look at the date, and if it was
more than four weeks old, you wouldn't drink it."
In fairness, Taiwan Beer now regularly wins
international recognition for its quality, and the sales
executive says the latest brewery, built a few years
ago, is one of the most modern in the world. Chang
Liang-show, beer division director of the Taiwan Tobacco
& Liquor Corp (TTL), the brewer that was only
incorporated last year, admits that the onset of
competition forced Taiwan Beer to clean up its act:
"Opening to foreign imports was of course a challenge
for us, but it was good for the overall beer market."
Foreign labels accounted for just 18 percent of
Taiwan's NT$45 billion (US$1.3 billion) market in 2001,
with Taiwan Beer taking the other 82 percent. But
Taiwan's World Trade Organization (WTO) entry in January
2002 changed things yet again, making Taiwan's beer
market into a truly open one by allowing the import of
beer manufactured in the mainland People's Republic of
China (PRC). The chief agent so far: China's Tsingtao
Beer, which launched sales in Taiwan last April.
Sales figures are sketchy, but the brand's
Taiwanese marketer, Sanyo Whisbih, reports that Tsingtao
garnered an amazing 6-8 percent of annual beer sales in
2002. In the context of the major markets, a 1 percent
change in market share is a major story, so the
performance of Tsingtao is truly remarkable - and many
foreign marketers believe the company's true market
share is even higher. It has since been joined by other
mainland brews - most notably, Beijing-based Yanjing
Beer. Clearly, the Greater China beer wars have begun.
Perhaps the easiest explanation for Tsingtao's
success is that it is inexpensive, at least at the
wholesale level. This has dealt a blow to other imports,
which had always blamed their own high prices on the
import duties they had to pay to the government
(actually, to the predecessor of TTL - in other words,
they had to pay import taxes to their biggest
competitor). And Sanyo Whisbih, which owns a chain of
convenience stores and also markets Whisbih, an
amphetamine-like drink highly popular with truck drivers
and heavy equipment operators, has done a remarkable job
of marketing the brand.
Yet while not all
Tsingtao consumers will admit it, the phenomenal success
of the first mainland Chinese alcoholic beverage to be
legally imported into Taiwan is in part also due to
feelings of cultural identity with the mainland. "It's a
real Chinese beer," notes one pub owner whose own
parents emigrated from China in 1949 and who proudly and
adamantly defines his nationality as "Chinese - not
Taiwanese".
It may be a bit of a stretch to call
Tsingtao an agent of Taiwan-China unification, but
things are clearly good on this side of the Strait for
the mainland brewer. The same cannot be said of the
mainland's reception for Taiwan Beer. Last month,
Democratic Progressive Party (DPP) Legislator Tsai
Chi-fang called for a boycott of Tsingtao and Yanjing
beers on the grounds that Beijing has refused to allow
the registration of Taiwan Beer (and also Kinmen
Kaoliang, a fiery distilled liquor made on Taiwan's
front-line island of the same name).
According
to Tsai, the PRC's refusal was based on a rule that bans
registering geographic names as trademarks (an
interesting argument given that Tsingtao itself is named
after Qingdao, the coastal city in Shandong province).
But the subtext of the ban on the use of the name is
clear: allowing "Taiwan Beer" to appear on mainland
shelves would somehow give assistance to supporters of
Taiwanese independence from China. Beijing has instead
insisted on the use of "TTL Beer" as an alternative
name. Not good enough, says the lawmaker, who warns that
the dispute will be taken to the WTO if China refuses to
allow the use of the Taiwan Beer brand.
Is it
all simply political grandstanding? Given that industry
sources, when questioned about the potential for Taiwan
Beer in China, simply shake their heads and laugh, the
answer, more than likely, is yes. Taiwan Beer has never
found much of an export market, with few outside of
Taiwanese communities having ever heard of the brand.
The brand could hardly be expected to compete on cost in
the mainland, and while it might find a market in the
hundreds of thousands of Taiwanese business people now
residing in China, its core market is clearly in Taiwan.
That is unlikely to change, despite the
bureaucratic shackles that TTL's Chang Liang-show
complains have limited his company's market potential.
Chang, a 30-year veteran brew master, is surprisingly
outspoken on the subject. "I understand this industry
better than any of these people [in the Taiwan
administration], but even though I'm the head of the
beer division, I am not allowed to market our products
myself," he says. "They changed the organization's name,
but we're still run in the same old way."
Now
that the cross-Strait taps are flowing, the same old way
- unremitting government interference, for reasons that
have little to do with the business of making and
selling beer - may not be good enough to maintain the
same old market share. But many Taiwanese will
nevertheless continue to drink the local beer - for
reasons of politics, cultural identity, or simply
because they like the taste.
(©2003 Asia Times
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