Pabst Blue Ribbon is known in the US as a cheap beer popular with blue-collar workers (and the occasional college hipster, if you believe the marketeers).
In China, it’s a luxury brew. Rebranded as “Blue Ribbon 1844” (the year that the Pabst Brewing Company was established in Milwaukee, Wisconsin), it is being sold for an eye-watering $44 a bottle.
As American wags have pointed out, that’s about $42 more than most of its usual drinkers would pay for it.
But Pabst brewmasters argue that they have developed a special ale exclusively for the Chinese market. They think the nouveau riche and banquet dinner crowd will be especially appreciative.
Perhaps so. Much is being made of Blue Ribbon’s aging in wooden casks. Rather ambitiously, brewmasters seem to think that this entitles comparisons with an illustrious peer group, likening it to “Scotch whisky, French brandy and Bordeaux wine”.
A heady mix, and one which has the US media more than a little perplexed. “Putting on airs,” says the Huffington Post. “The marketing coup of the century, ” scoffs the Baltimore Sun. The New Yorker magazine was also very taken with the suggestion that Blue Ribbon is a beer best drunk from a champagne flute.
One lesson? Arriving in China, perhaps think about rebranding – and at the higher end of the market.
While less of a stretch than for Pabst, Swarovski (the world’s leading manufacturer of precision-cut crystals) has also been making efforts to endear itself to wealthier Chinese clientele.
Swarovski sells synthetic crystal: a combination of quartz sand and water melted at high temperatures. Until the 1970s, it focused solely on wholesale of loose crystals. But the oil crisis forced the business to diversify into consumer goods, which now make up about 50% of the company’s revenue.
Today, Swarovski still sells loose stones in China but the company is losing out to lower-cost rivals. So the plan is to reinvent the brand as much more of a luxury label and sell jewellery to wealthier consumers.
Swarovski entered the China mamarket early, although the first-mover advantages may not have been entirely beneficial. In the mid-1990s it started selling its products through small counters in the shopping malls of big cities. It then moved on to (what were then) frontier cities like Xi’an and Chongqing.
In hindsight, Swarovski admits that it might have expanded too quickly.
“We entered the second-tier markets too early. We realised our mistake and tried to recover by setting up beautiful and high-end counters in big cities until our upscale image was accepted,” Allison Pyrah, vice president of Swarovski China told CBN Weekly.
To strengthen that image, the company recently opened its flagship store in the Shanghai Peace Hotel, hiring Japanese designer Tokujin Yoshioka to create what it calls a “Crystal Forest” of retail experience.
On the product front, the company is also making an aggressive push into fashion accessories and jewellery. For its newest watch collection, it hired Zhang Zilin, the first Chinese Miss World, as brand ambassador, who does her best to sparkle in a major new campaign.
Analysts say Swarovski is targeting the lower end of the luxury market – selling so-called affordable luxury to aspirational buyers. Products like crystal figurines, which cost around Rmb350, are affordable for middle-income consumers by Chinese standards. Its more expensive products, such as watches, range between Rmb5,000 and Rmb20,000. That means that they come in less expensive than top-tier brands like Patek Philippe and Rolex.
“Chinese consumption habits are different from that of other Asian countries,” says Pyrah. “For example, Japanese customers like the minimalist style of design, but the Chinese tend to favour more ornate designs – the more crystals the better.”
The rebranding strategy seems to be paying off. China has surpassed Japan as Swarovski’s second-largest market after the US. Last year, the Austrian company recorded an increase of 20% in sales.
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.