A healthy thirst

The craft beer in­dus­try has seen ro­bust growth in re­cent years de­spite a gen­er­ally shrink­ing beer mar­ket as win makes in­roads.

China Daily (USA) - - FRONT PAGE - By XUJUNQIAN in Shang­hai xujunqian@chi­nadaily.com.cn

The Olympic Games and an un­usu­ally scorch­ing sum­mer should have pro­vided a big boost for ma­jor beer com­pa­nies, not least for craft beers who are emerg­ing, it seems, stronger, swifter and faster.

The craft beer in­dus­try has been ex­pe­ri­enc­ing ro­bust growth in re­cent years de­spite a gen­er­ally shrink­ing beer mar­ket as wine makes in­roads. TheN­ational Sta­tis­tics Bureau an­nounced last month that for the first half of 2016, China pro­duced 22.51 mil­lion tons of beer, down by 8.36 per­cent year-on-year. The in­dus­try has recorded fall­ing pro­duc­tion, up to June, for 24 con­sec­u­tive months.

In con­trast, im­ports of craft beer have soared al­most five fold over the past three years. In June, Chicago-based brew­eryGoose Is­land was of­fi­cially in­tro­duced into China through An­heuser-Busch In­bev, which ac­quired Goose Is­land in 2011.

The do­mes­tic craft beer mar­ket is fac­ing severe com­pe­ti­tion. US craft beer tav­ern fran­chiseWorld of Beer opened its first over­seas out­let in Shang­hai, on a bustling neigh­bor­hood street next to Dr Beer, a lo­cal brew­ery and bar.

“Craft beer drinkers in Shang­hai have reached a so­phis­ti­cated level. For in­stance, they give us tips such asRus­sian Im­pe­rial Stout should be kept out of re­frig­er­a­tors in or­der to main­tain its rich fla­vor,” said Yin Cong, mar­ket de­vel­op­ment part­ner with World of Beer and the CEO of Shang­hai WOB Restau­rant Man­age­ment Com­pany.

The 31-year-old na­tive of Sichuan be­came emo­tion­ally and phys­i­cally “ad­dicted” to the first WOB out­let in Tampa, Florida where he worked with a lo­cal IT com­pany. In­spired, Yin then de­cided to in­tro­duce the con­cept to China.

“The craft beer scene has just started to emerge in China, and the num­ber of craft beer en­thu­si­asts has been in­creas­ing. Be­cause of this en­thu­si­asm, and World of Beer’s proven and suc­cess­ful model, we knew the con­cept would be a per­fect fit,” he said.

Founded in 2007 by two close friends, World of Beer started as a hum­ble neigh­bor­hood bar with an un­usu­ally ex­ten­sive of­fer­ing of craft beers. By adding dif­fer­ent types of craft beer found from lit­er­ally all over the world, it is now seen as the cu­ra­tor in the in­dus­try and has about one hun­dred fran­chises in the US.

The spa­cious Shang­hai out­let has been dec­o­rated in a style re­sem­bling the orig­i­nal in the US. Some 400 types of bot­tled beers are ar­rayed in the six-door cool­ers, plus an­other 41 craft beers are on tap.

While more than half of the of­fer­ings are from es­tab­lished brands or brew­eries around the world, the Shang­hai out­let has also some lo­cal brews, in­clud­ingMaster Gao, one of the ear­li­est craft beer brew­ers in China, based in Nan­jing, Jiangsu prov­ince.

Gao Yan, founder of Mas­ter Gao, es­ti­mated that there are up­wards of 60 craft beer brew­eries in China now.

“The over­sup­ply of in­dus­tri­al­ized beer in China has led the (cen­tral) govern­ment to adopt­ing a rather strict pol­icy about al­low­ing craft brew­eries to op­er­ate. But still, we have seen a grow­ing num­ber of brew­ers es­pe­cially in big cities,” said Yin, adding that the qual­ity, though, is still quite low.

Yin noted that the com­pany is plan­ning to open an­other three tav­erns in China by 2018, and a sec­ond one in Shang­hai.

“Shang­hai is like the test­ing ground for food and bev­er­age. If you don’t suc­ceed here, you are hardly go­ing to make it else­where in China.’’

Com­pe­ti­tion has been stiff. Aside fromWestern restau­rants, bars and su­per­mar­kets, a lo­cal gro­cery store op­er­ated by a Shang­hai busi­ness­woman, who has been lov­ingly nick­named “Beer Lady” by the ex­pat com­mu­nity, has a whop­ping col­lec­tion of 200 types of bot­tled beer.

But Yin is con­fi­dent that the mar­ket is large enough to have “more beer ladies”.

Euromon­i­tor es­ti­mated that in 2015, China’s high-end beer mar­ket, which is mainly dom­i­nated by craft beer, in­creased by 20 per­cent, but this still ac­counts for just two per­cent of the gen­eral beer mar­ket.

Av­er­age beer con­sump­tion in China is 34.2 liters per year, slightly higher than the world av­er­age of 33 liters. But an­a­lysts pre­dict that tastes are about to change with more opt­ing for more re­fined and ex­pen­sive beer.

And by 2017, China is likely to over­take the US as the world’s largest con­sumer of beer, ac­cord­ing to Euromon­i­tor.

“The way young Chi­nese peo­ple en­joy beer is so dif­fer­ent from their par­ents’ gen­er­a­tion,’’ Yin said, point­ing out that beer is drunk in larger glasses and quan­ti­ties to­day.

In fact, young Chi­nese are not only dis­play­ing a grow­ing in­ter­est in sip­ping craft beer, but also brew­ing their own beer.

Li Wei, pres­i­dent of the Bei­jing Home Brew­ing So­ci­ety, es­ti­mated that more than 20 provinces and cities now have their own so­ci­eties for home­brew lovers, and the num­ber of home­brew­ers is es­ti­mated at more than 10,000, about one-sixth that of the US.

The way young Chi­nese peo­ple en­joy beer is so dif­fer­ent from their par­ents’ gen­er­a­tion.” Yin Cong, CEO of Shang­haiWOB Restau­rant Man­age­ment Com­pany

WANG HAIBIN / FOR CHINA DAILY

Ts­ing­tao beer is ap­pre­ci­ated by thirsty cus­tomers dur­ing the In­ter­na­tional Beer Festival in Qing­dao, Shan­dong prov­ince, in Au­gust.

LI GA / XIN­HUA

Craft-beer brew­eries are en­joy­ing grow­ing de­mand for their prod­ucts. Pan Ding­hao (left) casts a crit­i­cal eye over his brew­ery’s out­put at the Panda Brew in Yiyang, Hu­nan prov­ince. He founded the ven­ture in 2013.

PRO­VIDED TO CHINA DAILY

Craft beer stored in theJi­uhuaer Co in Shang­hai. The firm runs China’s first craft-beer app.

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