The Economist - USA (2021-07-10)

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 financial­technology

firm’s  $37bn  ipowas  suspendedtwodays

before its shares were duetobegintrading

in Hong Kong and Shanghai.

All  this  is  chilling  bothChinesefirms’

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  effects  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

flotation  “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 firms and Americaninvestorsun­

ravels, both will suffer. Theformerarelos­

ing  access  to  the  world’sdeepestcapital

markets,  the  latter  to  someofitshottest

stocks. The market valueofChinesefirms

in America has fallen by 6%sincetheAnt

debacle  last  autumn  signalledashiftof

mood in Beijing, even as thes&p 500 index

of big firms 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

salesofthefull­strengthstuffhavestag­

nated. If Heineken and other brewing

giants have their way, tipplers will be

knockingbackpintsfrombreakfaston.

Beerswithno(orlittle) alcoholhave

beensoldfordecades.Buteventheirped­

larsadmittedtheytastedflat.Theywere

aimedatthosewhocraveda properbeer

but couldn’tindulge:thepregnant, reli­

giousordesignateddrivers.Multinational

brewerssawthemas“distressedpurchas­

es”andsoldthemunderseparatebrands

farremovedfromflagshipmarques.

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),tooffera “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 finished 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

firm.  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  offerings  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 fifth

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 office, 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 flavours 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  offer  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,  fit  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