Beer in China

PROSPECTS

Shrinking consumer base and changing demographics lead to stagnant performance

Total volume sales of beer fell in both 2016 and 2017, with 2017 being the fourth successive year of decline. This was due to a number of factors, including the dwindling population of beer drinkers and changes in consumer lifestyles such as increased consumption of alternative alcoholic drinks.

Leading brewers increase unit prices to maintain profit

Since 2015, the beer industry has struggled with overcapacity and an inability to deliver value to shareholders. The problem is likely to worsen given the declining beer volume sales in 2016 and 2017.

Weissbier/Weizen/wheat beer and stout enjoy heady growth

As total volume sales of lager continued to shrink in 2017, a range of small yet lucrative categories such as Weissbier/Weizen/wheat beer and stout blossomed. Brewed with wheat instead of barley, wheat beer offers not only a clear pale colour but also a fresher taste.

COMPETITIVE LANDSCAPE

Beer leans toward a more concentrated landscape

The five largest brewers (China Resources Holdings Co, Tsingtao Brewery Co, Beijing Yanjing Brewery Co, Harbin Brewery Group and Budweiser Wuhan International Brewing) continued to take the lion’s share of total volume sales of beer whilst increasing their share in 2017. Several factors contributed to this, including their well-established brand reputations, strong capital funding and ongoing efforts in new product development, marketing, and channel expansion.

Off-trade volume performance outstrips the on-trade

On-trade channels, such as outdoor barbecues (shao kao) and hawker stalls (dapaidong) are important distribution channels for beer manufacturers in China. Given the air pollution caused by cooking emissions and potential threats to social stability, governments in many provinces and cities implemented a ban on barbecues in outdoor spaces, which had negative effects on on-trade beer consumption.

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