China's Beer Market Moving Towards Craft
July 1 | China's Beer Market
As the craft beer movement sweeps across China, more and more beer drinkers are beginning to explore different types of beer. China's beer market presents a great opportunity for beer producers looking to break into the Chinese beer market. But what are the best ways to approach this burgeoning market? In this blog post, we’ll take a look at some strategies that brand owners can use to make their presence felt in the China beer market.
Introduction to China's beer market
As the most populous country in the world, China and its 1.4 billion netizens consume more and more beer every year. While in many western countries, there are downward trends in the consumption of alcohol, in China it’s the opposite. Alcoholic beer is more adapted to their taste and takes a great role in social relationships. Contrary to traditional liquor, beer is low in alcohol and more in accordance with Millennials’ search for a balance between enjoyment and health.
Like everywhere else in the world, when going out with friends, Chinese people drink beer
In the USA, beer consumption is plunging. While beer represented over 60% of alcohol consumption in the 90s, it only represents now a bit less than 50%. A consumption decrease could be linked to the rise of a healthy lifestyle within society.
In western countries, people try to drink less alcohol and eat less meat and sugar but more veggies instead. The opposite is true in China – people tend to consume more meat than before and more alcohol.
In fact, Chinese people aren’t necessarily drinking more beer, but rather more expensive beer. They try to emphasize quality rather than quantity.
Last year, the beer industry followed a positive evolution of a 7% year-on-year increase in revenue. In the time span of 5 years, the beer industry increased by +42%. If the volume sold in China is slightly decreasing, its value is increasing.
The beer market in China in a few words:
Due to the rise of Millennials and the constant increase in wealth, the Chinese consumer has a more nuanced view of brands. In the previous year, a foreign brand name would have been enough to suggest a “high-quality product”. But from now on, expectations for products are increasing in terms of quality, value, and service. Being a foreign brand is not enough anymore.
Market size evaluated to US$121.40bn in 2022; It’s the largest market in the world, ahead of the USA by nearly 10bn dollars.
China represents 12% of beer sales globally
In 5 years, the market revenue value increased by +42%
Compared to last year, the market value increased by +7%
China’s Annual beer consumption: 45.7 billion litres
The average per capita consumption stands at 29.6L in 2019 and 28.70L in 2022
The average per capita money spent on beer is $980
The proportion of high-end and ultra-high-end beer is expected to increase to 20% in the next 5 years (as of 2020)
By 2025 about half of the beer consumption will happen outside the domicile and account for 3 third of the spending made on beer
Actually, China is consuming twice as much beer as the US, and more than five times what Germany (the largest beer market in the EU) consumes. The Chinese beer market has matured over the years and its importation has been growing by double digits over the last 5 years. In 2019, China bought over $821 million of imported beer, dominated by EU producers (representing around three-quarters of imports).
The main importer of beer in China:
This means that 4 out of the 5 main importers of beer in China are from the European Union. European breweries have therefore an excellent opportunity to tap into this premium market.
Main companies importing or producing beers in China:
Tsingtao Brewery – Tsingtao Beer
CR Snow – Snow Beer (China’s most consumed alcoholic beer!)
Beer Consumption trend in China
The development of artisanal and craft beer in China.
In recent years, data showed a growing interest in quality beers (craft beer, brewery beer) in the country.
Even the Belgium company “AB InBev”, number 3 in the Chinese market, is buying local artisanal brasseries. Last year, they bought “Boxing Cat” in Shanghai. Chinese people love quality products. And an artisanal product will be highly competitive compared to an industrial one. Some companies as the Belgium one understood it, and therefore they are trying to surf on this new wave and level up their product range.
China and alcoholic beverages
Beer in China is a valuable market, but it tends to be more and more competitive. Indeed, many new companies are taking their chance in the middle-kingdom. However, statistics show that beer will represent only 25% of alcohol consumption by 2022 in China, while in 2015 it was over 30% (in market value).
Beer lady – Shanghai
Not to worry about this consumption drop, as it is in part due to a new way to consume beer: quality over quantity (= retail sales of craft beer in China are on the rise!). This new purchasing behaviour is influencing both prices and companies’ margins. However, craft beer is still an emerging segment of the Chinese beer market, and only represents 1.9% of the shares.
In terms of trends, we are also seeing a new interest in drinking non-alcoholic beer – still tastes of hops and malt, but without the effects of alcoholic beer. Actually, in 2020, almost half of the population of beer consumers in China had non-alcoholic beer monthly. In 2021, this segment recorded over 25% import value growth!
How to distribute your craft beer in China?
As you may imagine, there are many ways to sell your products and make money in China. To perform in this highly competitive market, full of barriers, you’ll have to follow some simple steps. Whether you choose to distribute your beer offline or through an online e-commerce platform, you won’t be able to skip your branding moment.
In China, for the exact same product, people would be ready to pay ten times the price if something is branded (cf Starbucks).
China has suffered for a long time with its poor-quality reputation – and not only in the foreign market. In the domestic market, this reputation sticks to most local brands. In the last decade, many regulations have been implemented to fight this issue, but it will take some time for consumers to trust local brands more.
However, the trust issue is very real for Foreign companies that wished to succeed in China. Locals scandals have affected heavily how people consume here. For instance, when purchasing online, company reputation is the most common factor taken into account with +72% of consumers saying that it is decisive (In comparison, less than 55% of consumers say that price influences them when purchasing online).
What does that mean for your beer brand when looking for Chinese sellers?
Who are you? What do you want?
What value can you bring me?
What can you do for me?
What guarantee of success do I have to cooperate with you?
Can we be friends?
Do people know you and do they love you?
Chinese distributors and consumers will do extended research on a company before taking any action. The above list of questions, is a good summary of the type of info distributors are looking for. They want a trustful business relationship. They don’t want to deal with someone and realize later on that it was a fake company or that the products themselves were low-quality.
Understand that for distributors of beers, it is relatively common to be contacted by an “American” (or other countries) company, and 2 weeks later discover that it was in fact 3 guys trying to do some business in their garage in China countryside.
With this context in mind, I’m sure you now understand why your future consumers and partners will care about comments and online reviews of your company and products. You can pretend to have the best beer in the world if there isn’t any review or article talking about it, it won’t work.
If you made it here, bear with us, it is time for some tips to understand how to build up your strategy and conquer the Chinese Beer market.
Establishing Your Brewery in China
Imagine, a brewer contacts you. He tells you that his company is super famous in China, and he wants you to distribute his product. I guess without a recommendation, it’s going to be complicated, right? Especially considering that his company is probably not referenced on Google and your search does not give you anything.
Canadian Craft Beer – Pit Caribou – Chinese Website in Chinese by Linked Group
It needs to be in Chinese (yes, it’s still their mother tongue), with a Chinese domain name. Plus, we recommend you adapt your website features to the local market. Due to cultural differences, their design is usually different than ours.
Open a Weibo account (official)
It’s like the Chinese Twitter. The most popular social media in China, it’s also an excellent platform to develop a KOL strategy. If you plan to target a large audience and engage with your target audience, Weibo is a must-do.
Open a certified account
Communicate with your community
Advertise your beer through sponsored ads
Engage your customers (with games and contests for example)
Offer your Beers visibility with Baidu: The Chinese Google
Having a Chinese website is good, but not enough. Consumers don’t trust companies… If they want to drink a good beer, beer lovers will check for information on Baidu (which has about 80% of China’s search engine market shares), and their Chinese Google.
Before buying anything, they’ll search for information about the product or the brand. It can be reviews, comments about something specific, forums, or general research to solve a problem they may have such as: “What’s the best beer for a Friday night? Or What’s the most favourite beer in China?”
As for customers, it’s very similar. Keep in mind that consumers in China tend to be suggestible and “act like sheep” … We mean here that they won’t buy something that nobody bought before. They don’t like to be the first to buy. On the other hand, they’ll be glad to buy something that everybody is buying.
The reason behind all this is that a famous product can be trusted. While if they’re the first ones to buy it, they have no guarantee of the product quality. And they don’t want to be cheated.
Therefore, building a strong e-reputation and a strong brand image is the best solution for you to gain the trust of Chinese consumers and future partners.
WeChat: A Chinese Marketer’s Best Friend
WeChat is like the Chinese Facebook. Everybody uses it in China. A great messenger APP that also gets a “moment” system allowing people to share content (messages, pictures, videos) and personal feedback.
Pit Caribou – WeChat H5 Brochure by Linked Group
Through this app, people use “WeChat groups” to communicate solutions to their problems and therefore recommend brands or products. Not very efficient for direct advertisement, but a super tool for community management and building engagement. You can also create your own groups through the APP.
Our WeChat recommendations:
Open an official account
Create an e-brochures
Engage with your followers
Douyin: the entertainment platform
A short video-sharing app growing very fast among young generations. It’s the perfect app to generate content and spread it to a wild audience. More intuitive and fun than WeChat and Weibo, this app is also an amazing tool for KOL strategy.
To resume the two first steps before conquering the Chinese beer market:
Make Yourself Visible
Develop an amazing e-reputation
Time to make money: what are the best beer sales channels in China?
You’re visible in China. Good.
You have a good reputation in China. Good.
But now, how do we make money? Without sales there is no business, we’ll detail you here the best way to sell your beer in China.
How to develop your Online Sales in China?
It’s probably the easiest way to make money in China. In western countries people are more accustomed to buying food and beverage in physical shops, in China, people are constantly focused on their phones. E-commerce online platforms are THE place to sell your product.
Just look at the 2019 Double 11 Day: $38 billion in a day. And most of the products have been bought through mobile phones.
Online purchasing behavior in China:
People are always looking for a product to buy online.
Your potential clients can buy your products from anywhere. They’ll just need access to a phone or computer.
If they are satisfied, they’ll buy from you again.
If you’re turning out to sell a lot of products on an E-commerce Platform, offline distributors will contact you by themselves.
Just for you to imagine how far it can go if you come to China one day and sit at a street food place. You can take your phone and order your favorite beer. You’ll be delivered in 30min.
People can even get delivered McDonald’s directly to a cinema. So, if they love your beer, be sure there won’t be any excuse for you not to make online sales.
China’s E-commerce trend for the Beer Market
As one-third of beers sold in China are sold online, this is an interesting option to look at even if your primary channels are traditional distribution:
The growth rate of online beer channels is close to 50%
Lager, Wheat & stout beer account for +80% of beer sold online in China
Canned Beer represents 70% of beer sold Online in China
Bottled Beer represents 20% of beer sold Online in China
To operate online, here’s what you can do:
Cross-border Ecommerce (Tmall Global, JD Global, etc.)
Chinese eCommerce platforms (Taobao, Tmall, JD.com, Pinduoduo, etc.)
What is Cross-Border in China?
Cross-border is about the importation of goods through sellers from foreign countries.
Let’s see how to sell your product through this model.
As an online e-commerce business model, you’ll need to have a platform. The main ones in China are currently Tmall Global and JD Global. Once you decide which platform you want to operate with, you’ll just need to set it up. Here’s the process:
Here’s the process to do CBEC in China:
Pay a deposit
Build a nice store
Advertise a lot (at the beginning)
Pay commission per sales
Pay daily operation management (high cost)
Need an active marketing campaign
The good part of cross-border e-commerce is that you don’t need to have a Chinese business license or any certification. The bad part is that it’s pretty expensive.
Chinese eCommerce platforms as your man beer sales channels
If you have the possibility to establish your business directly in China (with a W.O.F.E. for example), and therefore get a Chinese business license and the required certifications, you can use Chinese e-commerce platforms such as Taobao, Tmall, JD.com, etc.
It’s cheaper than cross-border and the time to deliver your product is faster. The main problem is that you’ll need to understand Chinese or hire someone that can deal with it on your behalf. Because all the stores will be in Chinese. Otherwise, the process to open your store is similar to the one for a cross-border platform.
Build a store, design pages
Participate in special events (double 11, 618, 12/12, etc.)
Manage daily operations
Store supported by your branding
If you still have doubts about selling Premium beer in China:
Corona, the famous Mexican beer owned by the Belgium group: AB InBev, decided to start local production in China due to the need of satisfying a high demand and in the same way solve supply problems.
There is such a high potential for development in the Chinese Beer market that Heineken decided to buy a 40% stake in China’s largest beer company, just to challenge its rival “AB InBev”
If you have any questions about the beer market opportunity in China, feel free to contact us.
Our solutions and services help you to reach out to many Chinese consumers and distributors, as well as develop your sales channels while building awareness and popularity, so every lover of craft beers knows about your products and your brewery!