The Booming Chinese Beer Market

By Adam Mysorewala | June 18, 2012 | 0 Comments |
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We all know China’s economy is growing, and the beer market is no exception. Earlier this week, Mintel—a leading supplier of consumer, product, and media intelligence—reported that China’s beer consumption has increased by 29% over the five years leading up to 2011. This astonishing growth has led China to become the world’s largest beer market and, amazingly, it’s still growing.

For the first time ever, China’s beer consumption hit the 50 billion liter mark in 2011—that’s a lot of beer. In fact, China’s consumption is a whopping 26 billion liters more than that of the second largest market, the United Sates (24 billion liters).  This enormous consumption is coupled with a 63% increase in value of beer, with the total market value reaching RMB 454 billion, or $71 billion, in 2011.

Even more astonishing than its enormous size is that fact that the Chinese beer market is still growing. Beer sales rose to 13% in 2011 nearly doubling the 7% growth rate of 2010. While Anheuser-Busch InBev and SABMiller have definitely made an effort to tap into the Chinese market, domestic producers remain the people’s choice. In 2009, 95% of Chinese beer drinkers said they prefer to drink domestic beer. One of these domestic breweries that has undoubtedly helped China become the beer behemoth it is today is Yanjing Brewery of Beijing, which employs 20,000 people and made a goal reach 8 million kiloliters and to capture nearly $3.5 billion (USD) in revenue by 2015 (For more on Yanjing check out Chinese Brewery Aims to be Global Powerhouse).

Yanjing’s goal to be the number one brewery in the world will be tough to achieve, though, as China’s beer market is riddled with stiff competition. Matthew Crabbe, director of China research at Mintel, explains, “While the market is booming, brewers need to compete more cleverly than ever before in order to engage with key consumer groups in China who will be key purchasers in the coming years, including the youth and women's markets, as well as connoisseur drinkers of premium beers.” Competition forces brewers to be more innovative in engaging consumers and Chinese beer loyalty makes this even harder. According to Mintel, Chinese beer drinkers value a beer’s brand equally to its taste.

Regardless of the difficulties of selling beer in China, the country’s market is extremely appealing to the world’s mega-breweries. Matthew Crabbe says, “China is where the leading multinational brewing groups are hoping to make the most growth these days, compared to relatively flat established markets elsewhere and the continued growth in sheer scale is a key factor in that interest.” However, there is space for craft breweries too. Crabbe continues, “With rapid rises in average incomes and the general feel-good factor about China's continued economic growth, consumers are not only drinking more beer, but are also beginning to drink more expensive beers.” The Chinese willingness to purchase more expensive beer, along with the country’s current lack of craft breweries leaves a big opening for craft beer in China.

As the Chinese beer market continues to grow, it will be interesting to see how it evolves. Is it possible that China will eventually be a craft beer haven, or will it remain a realm for mega-brews only? Here at Beer Universe, we look forward to keeping an eye on this market—who knows what great beers will rise from China in the years to come!

Your Choice.  Your Beer.  Drink Up.

- Beer Universe

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