The growth of craft beer consumption in China in recent years reflects the increasing prosperity and sophistication of taste among key consumer groups. This trend is still young and presents significant opportunities for foreign brewers who act now to penetrate the market with New World American Craft Beer.
Below is Contrabrand’s brief overview of the state of the Chinese craft beer market.
China became the world’s largest beer consumer in 2015 (1) and is set to become the world’s largest consumer of craft beer in 2017 (2) as Chinese consumers' appetite for premium beers shows continuing growth.
While the import of American beer continues its upward trend, the steady increase in the number of Chinese breweries in recent years reveals a diversification of tastes in the domestic beer market and a shift of consumer attitudes. Before 2010, around 14% of Chinese breweries were microbreweries or brewpubs creating what could be considered craft beer. Since 2010, over 58% of new breweries fit into this category (5).
A favorable drift towards craft beer is noted in a recent consumer research report from Kantar Worldpanel, showing that domestic consumption of imported beer increased by 40 per cent in 2016, even as sales of cheaper domestic beers such as Snow, Yanjing and Tsingtao declined. These statistics reflect a growing preference in urban markets for purchasing premium foreign products as well as a mounting interest in beer culture and connoisseurship among affluent consumers.
This attitude is confirmed by the growing number of international companies investing in China’s craft beer industry. In a 2016 report, Donnie Everts, VP of international development at Tampa, Florida’s World of Beer outlined why his company decided to open a branch in Shanghai:
Donnie Everts, VP of international development World of Beer (1)
As the general disposable income of consumers rises and the educated, affluent, brand-aware young assume leadership in purchasing trends, an enthusiasm for quality over value seen craft beer rise as a symbol of taste and sophistication.
Kurt Xia, Founder - Panda Brewery (4)
Our own observations of changes in beer consumption habits and trends echo the growing prevalence of this attitude towards craft beer as a pastime and status symbol. The increase over the past three years in the availability of imported craft beer at retail outlets in Chinese cities including supermarkets, small corner stores and independent coffee shops as well as at bars and restaurants has been dramatic and its enthusiastic adoption is a sign of great potential.
China’s craft beer scene has until recently been the preserve of in-the-know expats, hipsters, beer-nerds and those who have experienced premium beers while studying abroad. All of this is now changing with early-adopters crashing the party to order their fill of ale – a shift that we believe signals a crucial tipping point for the craft beer industry.
With most of the consumers in the world’s biggest market yet to experience the superior flavours and freshness of craft beer, the potential rewards are huge and, as with other consumer success stories in China, early-movers have the opportunity to shape the perception of a product category where experience and knowledge not yet mature.
Breweries already making in-roads into China include American representatives Stone, Lagunitas, Sierra Nevada and Firestone Walker. We believe significant opportunities still exist for ambitious craft beer makers and our goal is to help more breweries make similarly successful journeys into the Chinese craft beer market.
We are not alone in our optimism. A USDA Foreign Agricultural Service report from 2015 (3) predicted huge growth potential for American craft beer in the Chinese market (estimating up to 100% growth in value over three years). The same report also noted that achieving the best possible results relied on creating a positive brand image to promote craft beer and craft beer culture – the reason for Contrabrand’s very existence.
(1) Fox Business: China is Now the World's Largest Beer Market
(2) China Topix: China to Become World's Biggest Craft Beer Consumer: Report
(3) USDA Foreign Agricultural Service: U.S. Craft Beer Has a Great Potential in the China Market
(4) The Financial Times: Rise of premium beer in China boosts small brewers
(5) Ratebeer.com: China Brewery Listings