A project financed by the European Union
Implementing Partners
The imported and craft beer market in China
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Today’s speaker
Contact
BioPablo Recio Gracia
pablo.recio@eibens.com
www.eibens.com Pablo Recio Gracia
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Director of Eibens Consulting•
Living and working in China since 2005•
Strong focus on food and beverage import and distribution processes and trade barriers•
Previously worked for public agencies including ICEX (Spanish Institute for Foreign Trade) and Extenda (Trade Promotion Agency of Andalusia) as well as private companies•
Bachelor in Business from theUniversity and Granada and Masters in Quality Management and Business Internationalisation
Agenda
• The alcoholic drinks market
• Market segmentation
• Regulatory environment
• Market size
• Geographical distribution
• Main players
• Consumer
• Retail channels
• Case studies
• Opportunities and next steps
The Alcoholic Drinks Market
0 50 100 150 200 250
The alcoholic drinks market
•
The volume of the Chinese beer market is stagnating•
China’s consumption per capita is comparable to the world’s average•
This average and China’s enormous population makes it the largest beer market in the world•
It is twice the size of the US beer market in volumeTrends
BeerSpiritWine
BEER- China – 45.7 BEER - USA – 24.1 BEER - Russia – 8.6 BEER - Brazil – 12.0 BEER - Germany – 8.4 BEER – Other – 76.1
Other - World Spirits - World
Wine - World
bl litres
0 10000 20000 30000 40000 50000 60000 70000
2010 2011 2012 2013 2014 2015 2016 2017
Million liters
Breakdown Alcohol Market China by Volume
Cider, Perry and Rice Wine Wine Spirits Beer
Alcoholic drinks market overview
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0 50,000 100,000 150,000 200,000 250,000 300,000
2010 2011 2012 2013 2014 2015 2016 2017
Million USD
Breakdown Alcohol Market China by Revenue
Cider, Perry and Rice Wine Wine Spirits Beer
Source: Statista, 2018
Source: Statista, 2018
Market Segmentation
Market segmentation
Instead of the commonly used Standard, Premium and Super-Premium segmentation for beer markets, we have used a different one that represents in a more accurate way the Chinese market.
We have divided the market into 3 segments:
• Mass-consumed Chinese beer
• Leisure beer
• Craft beer and foreign brands on tap
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Some example graphics
3 2 1
1 2
Mass-consumed Chinese beer
Craft beer and foreign brands on tap Leisure beer
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Market segmentation
Mass-consumed Chinese beer
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Chinese brands domestically brewed.•
Low-priced – Beginning at circa 1.0 Euro per liter* both in foodservice and retail.•
600 ml returnable bottles the most common format in foodservice. 330 ml and 500 ml cans in retail.•
Consumed by people across all income levels, everywhere in China•
Homogeneous pale lagers with low alcohol percentage (around 3%)•
Largest brands: Snow, Tsingtao, Yanjing and Harbin•
Mature market, decreasing 3%annually for the last 3 years
•
Consumed along with meals*EU SME Centre research 10
Market segmentation
Leisure beer
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Foreign brands, domestically and internationally brewed•
High-price – Price on average 12.6 Euro per litre* in bars•
Served in 330 ml bottles, or 500 ml if produced abroad (e.g.Franziskaner)
•
Consumed by urban and high-income consumers•
Consumed mostly in T1 and T2 cities•
All sorts of beer types•
Many brands competing in this segment•
Growing market. Largest part of the import totalthat grew 38% in 2017 corresponds to this segment.
•
Stand-alone consumption or with finger food, at home and bars*EU SME Centre research
Market segmentation
Craft and foreign beer on tap
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Domestically and internationally brewed•
Very high-prices – 13.8 Euro average per litre in bars*•
Typically served in 400-500 ml glass•
Consumed by urban, young, high-income consumers•
Mostly T1, then T2•
Many different beer types, though Ales prevail•
There are few options yet, more widely available beers are acquired and distributed by AB InBev•
Market is growing exponentially•
Consumed either with Western-style meals or stand-alone.*EU SME Centre research 12
Market segmentation
~65%
~35%
~ 90%
~10%
Mass
Leisure Leisure
Craft
~0.4%
Mass Craft
~0.1%
Volume Value
Market size
The beer market trends in China
41570 41620
44900
48350
47790
49830
49360
47160
45060
28 41
47
64
111
184 338
538
646 5%
0%
8% 8%
-1%
4%
-1%
-4% -4%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
40000 42000 44000 46000 48000 50000 52000
2008 2009 2010 2011 2012 2013 2014 2015 2016
Million liters
Beer production and import volume in China
Domestic Production Import volume Growth YOY Production
Source: National Bureau of Statistics of China, 2016. China Customs, 2018
Imported beer
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183.7
337.8
538.3
646.4
716.2
231.5
407
575.1
665.7
750.4
67%
84%
59%
20%
11%
61%
76%
41%
16% 13%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0 100 200 300 400 500 600 700 800
2013 2014 2015 2016 2017
Beer import China volume and value
Volume (x1000 hl) Value (millions USD) Growth Volume YOY Growth Value YOY
Source: China-customs, 2018
Imported beer by country
209.5 110.7
69.7 65.9 63.4 51.7 49.8 40.7 25.8 12.8 9.2
41.2 Germany
Mexico Belgium Netherlands Portugal Spain Korea, Rep.
France United Kingdom Russia United States
Others
0.0 50.0 100.0 150.0 200.0 250.0
Imported Beer by country in Value (million USD) in 2017 TOTAL 2203
Source: China Customs, 2018
More than 70% of total import comes from Europe
Beer imports. Average CIF prices per country
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TOTAL 2203
Source: China Customs, 2018
Craft beer share
0.00%
0.01%
0.02%
0.03%
0.04%
0.05%
0.06%
0.07%
0 5 10 15 20 25 30 35
2007 2008 2009 2010 2011 2012 2013 2014 2015
Craft share of total beer market
Volume Craft share (%)
Source:Rabobank Canadean, 2016
Number of Microbreweries in China
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Number of registerd Microbreweries and Brewpubs is circa 80 in 2017•
These breweries combined have a beer count of circa 750Craft is still small Microbreweries and Brewpubs
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Jing-A Brewing Co.
Arrow Factory Brewing Great Leap Brewing Co.
Boxing Cat Brewery
0 10 20 30 40 50 60 70 80 90
2010 2011 2012 2013 2014 2015 2016 2017
Breweries
Registered Microbreweries and Brewpubs in China
Registerd Microbreweries
Source: Numbers retrieved from Ratebeer, 2018
Geographical distribution
Geographical distribution
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Source: National Bureau of Statistics of China, 2016
Geographical distribution of beer production in 2017 by quantity
Geographical distribution
Geographical distribution of imports in 2017 by quantity
Source: China Customs, 2017 data, retrieved in 2018
Geographical distribution
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Geographical distribution of breweries by beer count
Source: Ratebeer, 2018
Main players
Main players
Source: Euromonitor, 2015
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Main brands
Corona
Paulaner Wurenbacher
Oettinger
Chimay Leffe Erdinger
Franziskaner
Heineken Hoegaarden
Stella Artois
Duvel Vedett
La Trappe
Oranjeboom Tagus Estrella damm Cass Brewdog Kronenbourg
Lost coast Superbock
Baltika
Budweiser Goose Island
KBC
Brooklyn
Rogue
Available on Tap
Available in Bottle/Can
Duvel Moortgat
Heineken International Carlsberg Group AB-Inbev Liefmans
La Chouffe
Tiger Asahi
Carlsberg Kronenbourg
Consumer
Chinese consumer - Foreign or Local brands
8%
24%
7%
28%
35%
22%
50%
26%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Beer Wine
Preference local or foreign brands
Prefer Foreign Brands Somewhat prefer foreign brands Somewhat prefer local brands Prefer local brands
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Consumer trends are fast changing and worth checking in a separate event•
For beer. The percentage that prefers an imported brand over a domestic brand is in line with the share of Leisure and Craft beer•
Chinese preference for imported beer is concentrated but expandingSource: Mckinsey China 2017 consumer report
Retail Channels
Retail channels
Traditional convenience stores
Offering only mass-consumed beer, most
commonly in 600 ml returnable bottles. Very low price, circa 1 EUR/litre. This channel is quickly disappearing in T1 cities.
Convenience stores
They typically cater the mass-consumed and leisure segment. This channel is getting more popular and complements the changing working environment.
Beers are often more expensive than in other retail channels and there is a larger proportion of canned beer.
Retail channels
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Supermarkets and Hypermarkets
They all have several options in the mass-consumed segment. Variety of their imported beer portfolio depends on their size, prices are standardised.
Local Chinese Supermarket Wal-Mart Beijing
Retail channels
E-commerce
There are several generalist platforms (JD.com, YHD or Tmall) and some vertical platforms (jiuxian, ichinabeer.com, among others) offering a huge selection of beer, both domestic (competing in price) and imported
(competing in price and variety).
Retail channels
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Hotels
Chinese hotels tend to have mass-consumed beer since they are served with meals in a Chinese-style restaurant, normally they have no bars. Foreign chains are usually five-star hotels with several restaurants and bars, with a selection of imported beer as good as any from a bar downtown.
Restaurants
Traditional Chinese restaurants will only serve mass- consumed Chinese beer in bottles of 600 ml. Western- style restaurants and bars have a wider selection, since they are not as food-centered as Chinese restaurants.
Retail channels
Others (Bars, clubs, KTVs)
They usually have domestic produced beer and some foreign brands, almost always in bottles. Those located in T1 city will display a wider offer of foreign
brands, while those in smaller cities will limit their selection mostly to domestically brewed foreign brands (Budweiser, Carlsberg, Heineken…).
Bars with wide selection of beer on tap and Microbreweries
Growing exponentially in the last few years, especially in T1 but also in T2.
Western-style food is a central part of the offer. There is little perceived difference between bars with a lot of beers on tap and microbreweries from the consumer’s point of view.
Case Studies
Case studies – Local Craft
Pictures
Panda brew came from a tiny room in Beijing and now owns 8 fermenters, a terrace and food accompanying the beers.
They are even exporting their beer to the UK.
Case Studies – import craft
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Pictures
Brewdog the successful craft beer international from the UK. Sold 20.000 hl in China in 2017. Looking for opening a craft beer brewery in China and see it as their most important export market
Case Studies – Import leisure
Corona is owned by Ab Inbev and brewed in Mexico, from there it is shipped all over the world. Making Mexico the largest beer exporter in the world. The Corona brand is really popular in China.
Opportunities and next steps
Opportunities for EU SME’s
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Narrow product offering among local players More sophisticated consumer, higher income
Leads to a gap between the needs of a growing consumer base and the domestic production. This gap is filled by
imports and domestically brewed craft beer, that is limited to draft consumption due to stringent requirements to bottle beer in China.
Unlike in mature markets such as Europe or USA, the craft segment is still in its early stages.
Opportunity for EU SMEs
Next steps and key takeaways
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Pictures
• Beer market in China is targeted worldwide
• Exporters normally do not make enough an effort to understand and addapt. Avoid “first doing and then evaluating”
• Getting a first sale is easier than establishing long term agreements
• New technologies complicated multi distributor strategy
• Simple but effective marketing can make a big difference
• On the ground support can also be very relevant
• Different options to find partners in China
Events
• China Food and Drinks Fair 2018 (2019)
• March 22-24th
• Chengdu
• Largest food and beverage event
• http://www.cfdf.org/
• SIAL China 2018
• May 17-19th
• Shanghai
• http://www.sialchina.com/
• Craft Beer China Conference & Exhibition 2018 (CBCE 2018)
• Shanghai
• 15-18thof May
• Most important event for craft beer
• http://www.cbcechina.com/en/
• China brew and beverage 2018
• Oct 23-26Th
• Shanghai
• Focus on Wine, Spirits and Beer
• http://www.chinabrew-beverage.com/english/
Get Ready for China
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