60 Business The Economist July 10th 2021
inspection results” to theriskslistedinits
prospectus, alongside antitrust, pricing,
privacy protection, food safety, product
quality and taxes. It wentaheadwithits
New York iporegardless.Punishing the
company right after its listinglookslike
deliberate retaliation forpressingonbe
fore the regulators weredonewiththeir
probing, says Angela ZhangoftheUniver
sity of Hong Kong. Didi’s newpublicinves
tors were badly burnt as aresult,justasthe
private investors in Ant Group were in
November, when the financialtechnology
firm’s $37bn ipowas suspendedtwodays
before its shares were duetobegintrading
in Hong Kong and Shanghai.
All this is chilling bothChinesefirms’
appetite for foreign listingsandforeignin
vestors’ hunger for Chinesestocks,andnot
just in America. The day aftertheDidiban
the four biggest tech groupswithlistings
in Hong Kong—Tencent, Alibaba (which
has a dual listing), MeituanandKuaish
ou—lost a collective $60bninmarketcapi
talisation. The effects on some of the
world’s most innovative andvaluegener
ating companies of the pastdecademaybe
crippling, especially in conjunctionwith
greater scrutiny of Chinesecompaniesby
America’s government.
American regulators havelongsought
to force Chinese companies listed on
America’s bourses to submitauditingdoc
uments to an oversight body calledthe
Public Company Accounting Oversight
Board. In December Congresspasseda law
that would require suchdisclosureswith
bipartisan support. At thesametime,Chi
nese regulators have refusedtopermitChi
nese companies to make suchdisclosures,
declaring auditing documentstobestate
secrets. If the standoff doesnotease,Chi
nese groups could eventuallybeforcedto
delist from America.
So far there is no signofeasing.Before
Didi’s ipo, Marco Rubio, aRepublicansen
ator from Florida, calledonAmerica’sSe
curities and Exchange Commission to
block the transaction. Hefumedthatthe
flotation “funnels desperatelyneededus
dollars into Beijing andputstheinvest
ments of American retireesatrisk”.This
week he called the decisiontolettheipogo
ahead “reckless and irresponsible”.Presi
dent Joe Biden is less strident but his
Democratic Party also wantstocurbChi
na’s economic and technologicalmight.
As the symbiotic relationshipbetween
Chinese firms and Americaninvestorsun
ravels, both will suffer. Theformerarelos
ing access to the world’sdeepestcapital
markets, the latter to someofitshottest
stocks. The market valueofChinesefirms
in America has fallen by 6%sincetheAnt
debacle last autumn signalledashiftof
mood in Beijing, even as thes&p 500 index
of big firms has gained 30%asa whole.Di
di won’t be the last casualty.n
Alcohol-freebeer
Buzzkill
F
orthe10,000yearsorsoithasbeen
around,beerhasbeenrelieduponboth
torefreshandintoxicate.Today’sbrewers
thinkit couldthrivebyfocusingexclusive
lyontherefreshing.Alcoholfreebeeris
theboozeindustry’slatestgreathopeas
salesofthefullstrengthstuffhavestag
nated. If Heineken and other brewing
giants have their way, tipplers will be
knockingbackpintsfrombreakfaston.
Beerswithno(orlittle) alcoholhave
beensoldfordecades.Buteventheirped
larsadmittedtheytastedflat.Theywere
aimedatthosewhocraveda properbeer
but couldn’tindulge:thepregnant, reli
giousordesignateddrivers.Multinational
brewerssawthemas“distressedpurchas
es”andsoldthemunderseparatebrands
farremovedfromflagshipmarques.
Nolonger.Even beforethepandemic
shuttheworld’sbars,beerdrinkingwason
the slide, in part owing to healthcon
scious millennials bingeing less often.
Boozebaronsconcernedaboutlosingsales
tosoftdrinksinvestedinwaysofmaking
alcoholfree beer taste better. This has
startedtopayoff. Thoughnobodysober
wouldconfuseanalcoholfreebrewwith
therealthing,itisnowa credibledraught.
The product is good enough for mega
brands,from Japan’sAsahi to America’s
Budweiser(partofabInBev,theworld’s
biggestbrewer),tooffera “0.0”variant.
Part of the brewers’ interest stems from
boozeless beer’s frothy margins. Making
the stuff is actually more expensive than
making a straightup Stella. The process
usually involves taking a finished alcohol
ic beer and stripping away the booze
(brands guard their methods closely). The
expense is, however, more than compen
sated for by the savings on alcohol excise
duties that are no longer owed. It helps that
consumers appear to be willing to pay
roughly the same price whether a beer con
tains alcohol or not.
Beer that is entirely alcoholfree con
tinues to be niche. “At the moment, alco
holfree beer is still something you drink
when you can’t drink,” says Trevor Stirling
of Bernstein, a broker. Only 2.4% of beer
sold globally this year will be nonalcohol
ic, according to Euromonitor, a research
firm. Still, that is up from 1.5% a decade
ago, in part because traditional beer has
slipped. Much of the growth in 0.0 sales
has come from places that consume lots of
beer already, notably Europe.
The aim for brewers is therefore to re
position their virtuous offerings not as
beer at all, but as a premium soft drink for
grownups. That would give them a toe
hold in a business that is, by volume, near
ly four times as large as beer.
Indeed, many brewers believe that their
boozefree products can refresh the parts
of the market regular beers cannot. Bram
Westenbrink of Heineken says only a fifth
of its 0.0 drinkers would otherwise have
plumped for a normal beer. The Dutch
giant has pitched its alcoholfree brand as
a suitable tipple for the office, gym and car.
(It is also targeting more traditional beer
drinkers by sponsoring the European foot
ball championship now under way.)
The beer giants also think their invest
ments in deboozing give them an edge over
upstart rivals. Craft brewers, which have
thrived in recent years, work in small
batches for which stripping away alcohol
is uneconomical. Their hoppy flavours rely
on plentiful alcohol content to satisfy
drinkers, unlike the blander lagers that
dominate supermarket shelves. abInBev is
aiming for at least 20% of its sales to come
from no and lowalcohol beers (typically
below 3.5% alcohol by volume) by 2025, tri
ple the current share. Heineken already
has 130 0.0 products in its range.
Governments and socially minded in
vestors like to see beermakers offer alter
natives to alcohol. Far from damaging a
brand, having a 0.0 product is now a signal
of a mature marque. Brewers have long
tried to shift perceptions of beer as a lad
dish 1980s drink, fit only for football fans
looking to get bladdered. Craft beers were
one way to do that, but often turbocharged
hangovers because oftheirhigh alcohol
content. Now the industryisgoing the oth
er way. How refreshing.n
P ARIS
Once the preserve of the pregnant and
religious, alcohol-free beer is fizzing
Zero compromises