Market research: Beer market in China is the fastest growing in the world
Chinese customers, while being one of the biggest beer lovers in the world, consume more beer than any other country. Beer market in China is the fastest growing in the world producing 47.5 billion liters of beer in 2011. It grows at 5% annual rate and is expected to sell 61 billion liters in 2016 with increasing number of premium beer brands. Beer is the most often ordered drink in restaurants in China. However, it is noticeable that beer industry does not bring large profits and make it difficult for foreign producers to enter the market.
European producers struggle to enter beer market in China
The first reason to explain these difficulties of European producers on beer market in China is the transportation. As a result, foreign companies locate their breweries in China or create joint-ventures with local Chinese companies. Such domestic brewers as Tsingtao (Qingdao), Yanjing and Snow Beer dominate the market and have the largest market share. Snow beer is most loved by Chinese beer-drinkers, accounting for over 20% of market share. Despite such a considerable market share, the Beer market in China is extremely diverse and there are over 500 of brewers. Most of them operate locally rather than nationally thus giving opportunity to new market entrants. However, it is worth mentioning that foreign producers have been struggling to enter beer market in China since 1990s.
Still, love for luxury and rapidly shrinking Chinese middle class in recent years made bear market more open for foreign producers, whose products are regarded as luxury and high quality. As a result, premium brands in beer market in China currently account for approximately 5% of all brands, introduced in the market.
Example of foreign success on Beer market in China
This fact encouraged Russell Breweries, Canadian beer producer, to “tap into” Chinese market of beer. Canadian beer did not initially suit the specific tastes of Chinese customers, as the recipe of beer was not changed to make it more similar to Chinese. However, later a love for foreign beer and its tastes emerged and is still increasing in demand. Brian Harris, chief executive officer of Russell said: “They weren’t used to our beer, and I certainly wasn’t used to their liquor, but pretty soon their liquor tasted pretty good … and they ended up not only liking [Russell beer] but investing in it.” Carlsberg is another beer producer, which has had long experience in Chinese market since 1876. It has been acquiring and creating many joint-ventures with Chinese breweries since that time thus becoming one of the most demanded beer producer in China.
Increasing demand for premium beer
As it was mentioned above, beer market in China is the fastest growing in the world. Although Chinese government has been recently promoting healthy lifestyle, drinking culture and environmentally friendly production, love for beer among Chinese customers is not falling. On the contrary, additionally to ordinary beer, increasing demand for premium beer is clearly observed. This is explained by fast growing economy, love for luxury and rapidly shrinking middle class in China. Beer industry is highly diversified and creates good opportunities for new comers in China. However, market researches show that foreign producers are still struggling to enter Chinese market and gain a considerable share. The key will most certainly be the adaptation to Chinese taste and consumption habits for foreign producers on Beer market in China.
Article provided by Chinese Institute
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