Beer in China

PROSPECTS

Volume sales remain flat, whilst value sales increase

Total volume sales of beer remained flat in 2018, taking into consideration the fact that the beer category is mature and saturated in China. However, current value sales of beer enjoyed a rising trend, driven mainly by the rising cost of raw materials and packaging, which led to higher selling prices.

A decline in the beer-drinking population

Overall, the main consumer base has stabilised in China, although consumption habits have been changing, especially amongst young adult consumers, with the main consumption venues for beer shifting from KTVs to sports bars, skewer bars, home parties and even short journeys. Various beers are suitable for different occasions, such as lager for with skewers, and high-end craft beer for gathering at bars with friends.

The premiumisation trend maintains the steady development of beer

Compared with stagnant total volume growth, total current value growth was steady for beer in China in 2018. This was supported mainly by consumption upgrading and the growing demand for high-end beer and customised beer; particularly the emergence of craft beer in China, which currently has a tiny consumer base and is still at the stage of market cultivation.

COMPETITIVE LANDSCAPE

A relatively stable competitive landscape

Domestic players, represented by China Resources and Tsingtao Brewery, have recovered some volume share by focusing more on the middle and high-end of the market in beer, in addition to strengthening new product development and enhancing nationwide product marketing. China Resources, the leading player in terms of total volume sales in 2018, signed an agreement with Heineken to form a strategic partnership in 2018.

Dark beer and stout are gaining share

With a niche presence in the vast beer category in China, dark beer and stout are gaining attention amongst local consumers, along with growing product awareness. Diageo and Budweiser, for instance, cooperated and introduced Guinness Stout in 2017.

Domestic craft beer is increasingly popular

Craft beer has a relatively short history in China, dating back to its debut around 2012, with its official trade associate, Craft Brewer's Association of China (CBAC), coming into being only in 2017. Despite its niche presence in the market, craft beer is seeing robust growth in China, meeting the quickly rising demand, especially from businesspersons and the middle-classes, and is gradually reaching out to more consumers.

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