Bofferding: How to make it in China How it all began Mathias Lentz, Service Global Export representative at Bofferding responsible for the Chinese market Once a small family business, Bofferding S.A. has developed into Luxembourg’s number one distributor of drinks. Currently employing 267 people, it is part of the Bofferding National brewery, which resulted from the merger between two family-owned breweries. Created in Luxembourg in 1764, Bofferding which will soon celebrate its 250th anniversary, has managed to develop its reputation well beyond its borders. Bofferding | P. 22 The story of Bofferding in China began in 2007 when the tasty Luxembourgish beer was first introduced to the Chinese market through the famous Jade Garden Restaurants chain, King Man Group. "They knew us from Luxembourg and offered our beer in their prestigious venues. Due to this presence the demand for our beer began to grow. We were then approached by the Feng sisters who introduced us to the Beijing market", explains Mathias Lentz, Service Global Export representative at Bofferding responsible for the Chinese market. In order to increase its market penetration, it became important to find a partner to access the consumers at home. This marked the introduction of the Luxembourg brand to the Chinese distribution market after the Beijing Hualian Group investment Holding Co Ltd (BHG), one of the largest Chinese retailer operating a chain of stores, agreed to ensure it was stocked on the shelves of supermarkets. Active in more than 40 cities and 23 Chinese provinces, the Asian distributor has considerably helped the brand becoming a household name in China. "We are now present in more than 87 point of sales in Beijing and Shanghai including hotels, supermarkets, restaurants and bars", points out Lentz, who was appointed manager of the Chinese market in October 2012 in order to support the growth of the family business further to the agreement with BHG. After being present in Luxembourg for 250 years, the group which sells over 16,200,000l annually, is an uncontested leader in the Grand Duchy enjoying 60% of market share. However, running a business in China is a challenge as the brand is a relative newcomer on the Chinese market. In order to strike successfully, Bofferding received extensive support from Luxembourg diplomatic institutions. "Beside my full-base support and my numerous local friends, I can rely on the official diplomatic missions. The Embassy in Beijing and particularly the Consulate in Shanghai are always available for precious advice", says Lentz. "Our goal in China is to set up a company that will become a niche competitor in our selected markets", he adds. To do so, Bofferding implements two distinctive strategies in Beijing and Shanghai in order to penetrate the Chinese market. "In Shanghai we concentrate on on-trade business such as Hotels, Bars and Restaurants while in Beijing, we focus more on off – trade business such as supermarkets and retail stores", explains Lentz. Made in Luxembourg The Chinese beer industry has enjoyed impressive growth over the last past three decades, ranking as the largest market in the world with more than 500,000,000hl per year, representing ¼ of the world production. With competitors such as Snow beer (雪花) and Qingtao beer, both respectively ranked as the largest brand on the globe and the most famous Chinese beer on the international market, competition is stiff. "Obviously competition is keen so we have to be the best. Establishing our brand name therefore goes through testing and tasting our beers", says Lentz. Since its arrival in China in 2007, Bofferding sells up to 200,000l annually and will count four employees at the end of 2014. To adapt to the Chinese market, Bofferding can rely on the excellence of its products anchored in its long-standing brewing tradition. "Although every city and every area of China is different, the only selling strategy for all the regions is our absolute quality and pureness. And that has been our family philosophy since 1764", explains Lentz. Present on the market for 250 years, Bofferding’s brewery has tremendous experience in brewing top quality beer and that is exactly what Chinese consumers value the most. "Chinese consumers are very sophisticated in choosing their consumer goods. They love high and unique quality. Local consumers also value special beers brewed the traditional way, like slow brewing, using only pure ingredients", adds Lentz. In this respect, Bofferding Lager is a prime example of the brand’s savoir-faire. Brewed according to purity law and free of any additives and preservatives, water is drawn from its own natural source in Luxembourg, more than -300 meters below ground and is submitted to rigorous quality controls at all times. Bofferding’s strict controls for the highest quality are then key drivers of success. In fact, even though the Chinese government tightened food-safety standards in 2008 and required all breweries to comply with strict management codes, the market is still too easily saturated with low-quality products that don’t meet quality standards. In order to make a splash in Chinese homes, Bofferding also focuses on the participation and sponsoring of important events such as attending the Shanghai Formula 1 and the BMW Golf Masters which enable the brand to meet up to 150,000 guests but also sponsoring smaller events such as the Sinan Mansion Beer festival and the Kerry Beerfest gathering an average of 5,000 guests. "The events give us a chance to get closer to our customers and give them the opportunity to taste our products. Overall we get very good feedback and are always happy to see that our customers consist not only of one-timers", points out Lentz enthusiastically. and quality. "My family and I, we personally guarantee these important factors. This guarantee is highly appreciated and we will see the value of these factors becoming more and more recognised in the future: this will be the essence of our success." OB A bright future Since the Chinese market is the largest in the world, growth is certainly foreseeable. As regards the future of the Luxembourg brewing industry in China, Mr. Lentz is confident that its success will largely rely on Luxembourg’s long-standing savoir-faire Impressum Editor: Luxembourg for Finance • 12, rue Erasme • B.P. 904 • L-2019 Luxembourg • Tel. (+352) 27 20 21 1 • Fax (+352) 27 20 21 399 • Email lff@lff.lu • www.luxembourgforfinance.com Responsible for publication: Nicolas Mackel. Editorial Team: Ophélie Binet (OB), Gilly Mathieson (GM), Lynn Robbroeckx (LR). Circulation: 6,000 – quarterly. Photos: all rights reserved