As the biggest market but also the most populous country in the world, China and its 1.4 billion netizens consume more and more beer every year. While in western countries, people tend to reduce their consumption of alcohol, in China it’s the opposite. Even though liquors are not the favorite beverage of Chinese people, beer is more adapted to their taste and take a great role in social relationships.
In the USA, beer consumption is plunging. Actually, while beer represented over 60% of alcohol consumption in the 90s, it only represents now a bit less than 50%. A consumption decrease that could be link with the rise of a healthy lifestyle within our society.
And when in western countries people try to drink less alcohol, eat less meat and sugar but more veggies instead. At the opposite, in China people tend to consume more meat than before and more alcohol.
In fact, Chinese people don’t drink more beers… but they drink more expensive beers. They try to emphasize on the quality rather than the quantity. Last year, the beer market followed a positive evolution of 7%. Based on 5 years, the beer market increased by +42%. So even if the volume sold in China is slightly decreasing, its value is increasing.
Why? Well, you might consider the following elements:
- China GDP (Purchasing Power Parity) increased from $20 trillion in 2015 to over $23 trillion in 2017
- In 2018, the purchasing power per habitant increased of +6.6%
- Rise of the minimum income per habitant
- Development of the middle class: 350-400 million peoples (corresponding to six times the population of France and the all population of the USA)Due to the rise of Millennials and the constant increase level of 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 “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.
Due to the rise of Millennials and the constant increase level of 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 “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.
The beer market in China in couple words:
- Market size evaluated to $85 billion by Euromonitor
- China represents 12% of beer global sales
- In 5 years, the market value increase of +42%
- Compared to last year, the market value increased of +7%
- Annual consumption of 45.7 billion liters
- The average per capita consumption stands at 29.6L in 2019
Actually, China is consuming nowadays twice as much beer as the US, and more than five times what Germany (the largest beer market in EU) consumes. The beer market has matured over the years and its importation has been growing by double digits over the last 5 years. In 2017, China imported over $750 million of beers, dominated by EU producers (representing around three-quarters of importations).
The main importer of beer in China:
- Germany
- USA
- Belgium
- Netherlands
- Portugal
Meaning that 4 out 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:
- Anheuser-Bush InBev
- Heineken
- China Resources
- Tsingtao Brewery
- Carlsberg
- Molson Coors
New trend:
The development of artisanal beers in China.
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 alcohol
Selling beers in China is a valuable market. But it tends to be more and more competitive. Of course, many new companies try to penetrate the market to distribute their beers. However, according to some forecast, beer will represent only 25% of alcohol consumption by 2022, while in 2015 it was over 30% (in value).
A new purchasing behavior influencing prices and companies’ margins.
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