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 Bio

Pablo Recio Gracia

pablo.recio@eibens.com

www.eibens.com

Pablo Recio Gracia

• 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 the

University 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

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The Alcoholic Drinks Market

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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 volume

Trends

Beer

Sp

irit

Win

e

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

Millio

n liters

Breakdown Alcohol Market China by Volume

Cider, Perry and Rice Wine Wine Spirits Beer

Alcoholic drinks market overview

6

0

50,000

100,000

150,000

200,000

250,000

300,000

2010 2011 2012 2013 2014 2015 2016 2017

Millio

n U

SD

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

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1 2

Mass-consumed Chinese beer

Craft beer and foreign brands on tap

Leisure beer

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3

Market segmentation

Mass-consumed Chinese beer

• 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

10*EU SME Centre research

Market segmentation

Leisure beer

• 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 total

that grew 38% in 2017 corresponds to this segment.

• Stand-alone consumption or with finger food, at home and bars

11*EU SME Centre research

Market segmentation

Craft and foreign beer on tap

• 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.

12*EU SME Centre research

Market segmentation

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~65%

~35%

~ 90%

~10%

Mass

Leisure Leisure

Craft

~0.4%

Mass

Craft

~0.1%

Volume Value

Market size

The beer market trends in

China

15

41570 41620

44900

48350

47790

4983049360

47160

45060

2841

47

64

111

184338

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

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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

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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

• Number of registerd Microbreweries

and Brewpubs is circa 80 in 2017

• These breweries combined have a

beer count of circa 750

Craft is still small Microbreweries and Brewpubs

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Jing-A Brewing Co.

Arrow Factory Brewing

Great Leap Brewing Co.

Boxing Cat Brewery

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10

20

30

40

50

60

70

80

90

2010 2011 2012 2013 2014 2015 2016 2017

Bre

weri

es

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

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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

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Corona

Paulaner

Wurenbacher

Oettinger

Chimay

LeffeErdinger

Franziskaner

Heineken

Hoegaarden

Stella Artois

Duvel

Vedett

La Trappe

Oranjeboom Tagus BrewdogCassEstrella damm Kronenbourg

Lost coastSuperbock

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

CarlsbergKronenbourg

Consumer

Chinese consumer - Foreign or

Local brands

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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

• 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 expanding

Source: Mckinsey China 2017 consumer report

Retail Channels

Retail channels

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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 storesThey 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 HypermarketsThey 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

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E-commerceThere 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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HotelsChinese 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

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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

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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

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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

• 15-18th of 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/

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Get Ready for China

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www.eusmecentre.org.cn