[WSJ] Formaldehyde rumored in Chinese Beer

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Beer Buzz in China
Over Formaldehyde
Fuels Health Scare

By GEOFFREY A. FOWLER and JONATHAN CHENG
Staff Reporters of THE WALL STREET JOURNAL
July 27, 2005; Page B1

Fears about formaldehyde in Chinese beer have offered a vivid lesson about public-health scares in China and how newspapers, Web sites and marketers can drive the agenda more than state authorities.

Earlier this month, Beijing's respected Global Times newspaper published an article claiming that some 95% of China's domestically produced beer contains formaldehyde, much of it exceeding the nation's standards by a factor of six. The paper printed its exposé alongside a letter from an anonymous reader who "wanted the public to know" that the use of formaldehyde as a stabilizer had become "an unwritten rule" among many Chinese breweries. "There is only one reason," the letter said. "Formaldehyde is the cheapest!"

The claim raced across Chinese Web sites, prompting accusations of a coverup from outraged consumers. "My right to know has been deprived," because most breweries aren't disclosing their practices, said one posting on Sina.com, a popular Internet portal. "Today I declare: I will no longer drink beer." Soon came the announcement of an emergency beer test by the government and emphatic denials by the biggest brewers.

It turns out some beer makers in China do use formaldehyde, a practice that has been abandoned in the West. While the Chinese government insists the levels are safe and within international standards, consumer activism may have triggered a change in some smaller brewers' practices.

The fracas illustrates the tumultuous state of China's consumer-goods market. Until the end of the Cultural Revolution, most Chinese were bereft of all but the most basic and crudely crafted products. The shift to a free market beginning 20 years ago brought a flood of new goods. But it also ushered in a Wild West atmosphere in which greedy companies and weak regulations have left shoppers awash in counterfeit, defective and sometimes fatally unsafe products.

Chinese consumers are fed up, and muckraking newspapers and Internet users are giving them a voice. In April last year, for instance, the press helped expose counterfeit powdered milk, which lacked nutrients and was causing babies in poverty-stricken Anhui province to develop swollen heads, leading to 13 deaths.

The newly empowered consumer voice can be loud -- but also sometimes misdirected. "It's a mixed bag," says Roy Wadia, the China media-relations officer for the World Health Organization. "Whatever the source of that information is, whoever is first and fastest normally wins the race."

In the case of formaldehyde, among the many breweries in China, "some add formaldehyde, some don't," says Xiao Derun, director of the Chinese Alcoholic Drinks Industry Association's beer department. Beijing Yanjing Brewery Co., one of the nation's top three beer makers, took out ads in major financial newspapers saying that it doesn't use the additive. Tsingtao Brewery Co., the country's biggest brewer, which annually exports more than 800,000 cases to the U.S., made a similar statement. Many smaller brewers are keeping mum, and some are quietly exploring alternatives, suppliers say.

Staff members at the Global Times, part of the state-owned People's Daily newspaper group, declined interview requests, saying the issue is sensitive.

Formaldehyde is periodically rumored to be in various Asian brews: For decades, backpackers in Southeast Asia have shared urban myths about getting headaches from the chemical in the local beer. (Major brewers in Southeast Asia deny the practice.)

Drinking the stuff sounds gruesome, but it probably isn't life-threatening. The chemical has a number of uses, from making furniture to preserving dead bodies, including that of Mao Zedong in a Tiananmen Square mausoleum. Breweries may drip formaldehyde into the mash as an inexpensive way of improving the beer's color and preventing sediment from forming during storage. Brewers in China compete fiercely on price, with a cold one costing as little as 25 cents.

It didn't take long for the formaldehyde chatter to reach China's $76 million beer export market. Japanese officials asked the Chinese government to investigate the claim and instructed importers to confirm that beer brought into Japan doesn't contain added formaldehyde.

At a July 15 news conference, officials of China's General Administration of Quality Supervision, Inspection and Quarantine assured drinkers that it had just conducted an emergency study and found an average formaldehyde content for Chinese beer of less than 0.9 milligrams per liter, the WHO's limit for the chemical in drinking water. Even when it isn't added, they noted, formaldehyde in very small quantities is a natural byproduct of the brewing process.

In the U.S., formaldehyde is allowed in beer and found in other foods in very small quantities, says Charles Bacon, program manager for beer at the Alcohol and Tobacco Trade and Tax Bureau, which regulates beer in the U.S. and checks products coming into the country. "We're talking a drop in the ocean," he adds. Most major U.S. brewers, including Anheuser-Busch Cos., say they have never used the chemical in their products.

It's too early for market researchers to say whether the controversy has hurt sales. Chinese drink as much as $20 billion in beer a year, according to the highest estimates, and right now many parts of the nation are enduring a heat wave.

But already, one company has found an advertising hook in the formaldehyde question. Shenzhen Kingway Brewery, which stopped adding formaldehyde to its beer in 2003, features a pair of computer-animated chameleons stumbling upon a dance party in the jungle in a current TV commercial. After sneaking up to chug some beer, one of the chameleons points to the label and says: "No formaldehyde! It's healthy! It's cool!"