"Competition will be fierce," said Chen Qigang, vice general manager of Suntory (Shanghai) Marketing Co. "We're confident that we'll sell 250,000 tons of beer in the city this year."

First-quarter sales of Suntory, a local popular brand, rose 30 percent to 30,000 tons from a year earlier. This month, the company has sold 12,000 tons so far.

"About 5 to 10 percent of local demand still hasn't been fulfilled, even with a 100,000-ton increase in beer output this year," said Chen.

Occupying more than 40 percent of the local market, Suntory was Shanghai's top-selling beer last year, with sales reaching 180,000 tons.

Enthusiastic challenges from foreign and domestic brewers, including Shanghai Mila and Tsingtao, are intensifying competition.

In October, Heineken, the world's No. 2 brewer after Budweiser, and Singapore Asia Pacific, the owner of Tiger Beer, jointly acquired an additional 27 percent stake in Shanghai Mila Brew Co.

The two companies now own 97 percent of the brewer of Reeb - another local popular brand.

After injecting 150 million yuan (US$18 million) into Mila, the two investors are developing new marketing strategies, including adjusting beer tastes and ad campaigns to suit the local market, said a company source.

"Mila might shift its focus to Tiger, instead of Reeb," said Wu Jianhua, secretary general of the Shanghai Brewing Association. "It's not easy to challenge Suntory's dominance in the middle market, so developing the upscale market may be effective."

Last year's local sales of Tiger were estimated at only hundreds of tons.

With a projected loss of 30 million to 50 million yuan, Mila hopes to raise sales by more than 20,000 tons to 100,000 tons this year, Wu said.

Banking on its newly introduced Huadong brand targeting the low-end market, Tsingtao aims to double its sales in Shanghai to more than 80,000 tons in 2001.

China's No. 1 brewer is relying on Huadong's performance, instead of its traditional Tsingtao brand, to break even, Wu said. Priced at 1.8 yuan, annual output of Huadong is expected to hit 30,000 tons this year.

Tsingtao's sales in the first quater in Shanghai were 3,500 tons.

(Eastday.com 03/28/2001)