The World of Chinese - - Editor’s Letter - BY CAR­LOS OTTERY

In a drinking cul­ture dom­i­nated by bai­jiu ban­quets and tepid lagers, grow­ing num­bers of young Chi­nese are say­ing gan­bei to craft beer. In­ter­na­tional con­glom­er­ates thirst for a share of this mar­ket, but independent lo­cal brew­ers aren't leav­ing with­out a fight

It’s the Fri­day be­fore Spring Fes­ti­val and around 150 peo­ple are crammed into one of Bei­jing’s most pop­u­lar brew­pubs. The crowd is roughly a third white male “neck­beards,” the rest Chi­nese, sink­ing a few pints of 40 RMB ale be­fore they spread across the coun­try to visit rel­a­tives who will likely have never heard of craft beer, still less tried it.

I’m drinking an Ed­mund Back­house pil­sner, its name a nod to the tear­away ex­pat scholar and fab­u­list, whose Qing-era sex mem­oir was to later scan­dal­ize his­to­rian on Hugh Trevor-roper. The young aca­demic fa­mously in­ves­ti­gated Hitler’s death af­ter the de­feat of Nazi Ger­many—the very coun­try that helped in­tro­duce mod­ern brew­ing to China. It feels like there’s his­tory in ev­ery sip; and maybe a few pints of Back­house will lead to some sim­i­lar ad­ven­tures—or, at least, loosen my tongue enough to tell some

tall tales of my own.

China may be only a decade into its craft beer rev­o­lu­tion, but this move­ment—as some see it—was also ini­ti­ated by for­eign forces. To­day there are over 300 craft brew­eries on the main­land, and the po­ten­tial for growth is huge. Sev­eral of the largest overseas con­glom­er­ates are now cir­cling these early pi­o­neers, sali­vat­ing at the po­ten­tial for growth. Some lo­cal brew­ers see the chance to make a quick buck, but oth­ers view “Big Beer” as the first nail in the cof­fin for a lo­cal­ized small-batch ap­proach that’s been strug­gling to es­tab­lish it­self.

Pre­dictably, China al­ready lays claim to one of the world’s old­est beers, a brew made in to­day’s Shaanxi prov­ince us­ing fer­mented mil­let, pearl bar­ley, and snake gourd root, al­legedly dat­ing back to the Ne­olithic Age. One Hong Kong brew­ery has even at­tempted to recre­ate the aged ale, de­scrib­ing it as “sweet, tart, and funky.”

Yet, up un­til about 10 years ago, its drinking cul­ture was dom­i­nated by just a few vari­ants of sorghum liquor (the in­fa­mous bai­jiu), Shaanxi-style yel­low wine, and four tepid lager brands: Snow, Harbin, Yan­jing, and Ts­ing­tao. Al­most un­heard of out­side China, these re­gional mega-brews take up al­most 60 per­cent of the Chi­nese mar­ket, ac­cord­ing to Euromon­i­tor. Other than the oc­ca­sional Euro­pean beer hall—paulaner Bräuhaus opened its first branch out­side Ger­many, in

Bei­jing, in 1992—China and the Big Four re­mained com­fort­ably, ro­bustly home­bound.

Then came the Olympics in 2008. Quan­ti­ties of craft ale—im­ported to sat­isfy an Amer­i­can ap­petite whet­ted by small-batch brew­ers from cities such as Port­land, San Diego, and Den­ver— were sim­ply left on su­per­mar­ket shelves af­ter the Games, a glut of good grog go­ing to waste. “The craft beer just sat there for­ever… you were pay­ing eight or nine bucks for beer that had ex­pired and I was like, OK, I am done,” says Carl Set­zer, who owns the Great Leap Brew­ery chain.

With pierc­ing blue eyes, lum­ber­jack beard, and a frame not dis­sim­i­lar from one of his kegs, Set­zer has been called China’s first proper craft brewer; cer­tainly, he doesn’t ar­gue the point. “There hasn’t been any­one able to do any­thing close to what we have done,” he says with a look of ut­ter sin­cer­ity. Set­zer is the no-non­sense, salty union-rep of China’s independent craft beer scene—if Big Beer wants a trade war, he’s seem­ingly happy to bring it.

In truth, a man by the name of Gao Yan had al­ready set up a small brew­pub in the south­ern city of Nan­jing, un­der the Mas­ter Gao brand, and has been carv­ing out a suc­cess­ful busi­ness ever since—but the for­eign press corps, ever re­luc­tant to leave the cap­i­tal, seized on the open­ing of Set­zer’s tiny tap­room, es­tab­lished in a Bei­jing hu­tong in 2010 and still sol­dier­ing on, as the dawn of a new beer-a.

Set­zer may have been first to mar­ket, but oth­ers had been nurs­ing sim­i­lar dreams around the same time. The ma­jor­ity had been ama­teur hob­by­ists back home—“just muck­ing around in a friend’s garage,” as one put it— who, frus­trated by the lack of op­tions, started ex­per­i­ment­ing for the hell of it.

“The im­port mar­ket was pretty weak, with only a few craft beers com­ing in, and they were of­ten stale,” says Richard Am­mer­man, one the old­est em­ploy­ees of Jing-a, a tap­room-brew­pub in the cap­i­tal. “There were quite a few craft beers I missed, so that’s how I got into it. It’s a lot of fun when you’re do­ing it at home. You have quite a lot more room to make mis­takes… worstcase sce­nario, your friends will drink any­thing.”

That’s no longer quite the case. The in­dus­try has kicked into gear. Though the big-city small brew­ers out­wardly claim ca­ma­raderie, there is a fierce ri­valry that of­ten spills into out­right hos­til­ity once the beers flow. While brew­ers keep their eyes peeled for new play­ers on the mar­ket, they claim— pub­licly, per­haps disin­gen­u­ously—the more, the mer­rier. It’s proof that there’s a strong mar­ket and brew­ers are more than just a clique of ob­ses­sive cra­zies.

“Great Leap pre­ceded us by about half a year, which we had two thoughts about,” says Chan­dler Jurinka, a for­mer mil­i­tary man who founded Slow­boat Brew­ing Com­pany in 2011, nar­rowly miss­ing the ti­tle of “Bei­jing’s first craft brew­ery.” “It was like well, ‘Oh well, there is a new craft beer guy in the hu­tong… now, as dis­ap­point­ing as it was that we were not the first, it was also in­vig­o­rat­ing be­cause we re­al­ized we were not the only ones… it was a vin­di­ca­tion of our busi­ness model.” This van­guard in­cluded Jing-a, which now has two lo­ca­tions in Bei­jing, along with Nbeer, Panda, Peip­ing, For­ever Beer, and Ar­row Fac­tory; Krakhaus Brew­ery

in Huizhou, Tian­jin’s WE Brew­ery, He­bei’s Ur­brew, Taps in Shen­zhen, Bad Mon­key in Dali, PK and Lib­erty Brew­ing in Guang­dong prov­ince, and Box­ing Cat in Shang­hai—the lat­ter now the lo­cus of some con­tro­versy.

In March 2017, An­heuser-busch Inbev, a Bel­gian-brazil­ian bev­er­age con­glom­er­ate and the world’s largest brewer, pur­chased Box­ing Cat. The sum was undis­closed but, off the record, two sources said it was an ini­tial fig­ure of 10 mil­lion USD, with a fur­ther 30 mil­lion based on fu­ture sales. The fig­ure is in line with the 39 mil­lion paid by the con­glom­er­ate for Goose Is­land, a Chicago-based brewer, in 2011.

De­spite the Goose Is­land pur­chase, AB Inbev missed the boat on the emer­gence of craft beer in Amer­ica, ap­par­ently not re­al­iz­ing it would grow to around 15 per­cent of the mar­ket in less than two decades. Of the 6,000 craft brands in the US, AB Inbev owns about 10; for a com­pany that rakes in over 50 bil­lion USD an­nu­ally, and sells nearly one-third of the world’s ale, that’s pretty small beer.

Yet AB Inbev seems de­ter­mined not to make the same mis­take again in China, which now has over 300 craft brew­eries, with brew­ers claim­ing an in­crease in an­nual sales of over 25 per­cent. Lo­cals fear AB Inbev’s ag­gres­sive busi­ness prac­tices, and worry they are go­ing to be can­ni­bal­ized.

An­other is­sue is chancers hop­ing to pig­gy­back off a brewer’s hip­ster ca­chet by steal­ing it. Dali’s lon­grun­ning Bad Mon­key brew­ery has is­sued le­gal let­ters to at least eight im­posters bear­ing the dis­tinc­tive mon­key logo and sell­ing their own beer, branded as Bad Mon­key.

“Those copy­cats are just unimag­i­na­tive…” says 42-year-old co-owner Scott Wil­liams, us­ing a curse word com­monly hurled by cab­bies. “No ideas, no noth­ing. ’Course, it’s a bit flat­ter­ing, be­cause it hasn’t hap­pened to Box­ing Cat or any­thing.”

In the­ory, there should be room for ev­ery­one—af­ter all, China is vast and var­ied, and its peo­ple love to drink. Chi­nese lit­er­a­ture is lit­tered with wives pawn­ing gold hair­pins to fund their hus­bands’ three-day ben­ders, and its poets are as known for their al­co­holism as their verse. Drinking to women, drinking to the gods, drinking to the moon, the Chi­nese seem happy to gan­bei at the drop of a glass. Eighth­cen­tury poet Li Bai wrote ob­ses­sively about wine and drunk­en­ness, and was known as one of the “Eight Im­mor­tals of the Wine,” a group of lauded Tang literati known for their love of liquor.

Mod­ern drinking cul­ture, though, is not what it was: Many young­sters loathe bai­jiu ban­quets—which of­ten start early and con­tinue un­til the boss is red-faced and needs to be wheeled out—and the cul­ture of toasts and face is not well suited to the leisurely sup­ping of craft brews. Younger, ur­ban Chi­nese are grad­u­ally shun­ning this binge-booze cul­ture, spurring the craft scene—though the lat­ter makes up as lit­tle as 0.1 per­cent of the cur­rent mar­ket, ac­cord­ing to For­tune. As one Bei­jing-based brewer put it, “The Yan­jing brew­ing com­pany made 7.4 mil­lion hec­to­liters last year; craft beer in China doesn’t even reg­is­ter as a per­cent­age of the loss that they dump dur­ing pack­ag­ing.”

Word on the street is that, when AB Inbev ap­proached Great Leap’s Set­zer, he lit­er­ally told them to “f*ck off.” So I go to the horse’s mouth: “That’s not a ru­mor. That’s some­thing that hap­pened,” Set­zer says with rel­ish. “They didn’t come to me first, they came to ev­ery­one. They went to Shangri-la, they went to Jing-a [but] not ev­ery­one told them where to go… [al­most] ev­ery­body else bent over back­wards to try to get that cash, be­cause—mi­nus Box­ing Cat—most of the craft brew­eries in China started

af­ter 2011. The only thing they know about craft beer is that, if you do it, you will get money. Some­one will come and buy it from you.”

But Big Beer does not al­ways guar­an­tee big suc­cess. Box­ing Cat’s first in­vest­ment in Bei­jing, a pop-up in a court­yard ag­gres­sively po­si­tioned op­po­site Jing-a’s orig­i­nal tap­room, has al­ready fallen to the re­lent­less wreck­ing ball of de­vel­op­ment. Mean­while, Set­zer has been spend­ing his own money to ar­range pub­lic fo­rums for lead­ing brew­ers to dis­cuss how AB Inbev might be dis­rupt­ing the global mar­ket. It’s a per­fect pul­pit for the big man to make his feel­ings ex­plic­itly known, but al­most ev­ery brewer TWOC spoke to had con­cerns.

“I don’t think the big guys com­ing and tak­ing over is great,” Jurinka says. “What it does is liken in­dus­trial beer to lo­cal beer. There is noth­ing wrong with tak­ing a lo­cal beer and dis­tribut­ing all over China. But those are two dif­fer­ent things. What we do is lo­cal; we sell to lo­cals, the peo­ple em­ployed are lo­cal.” Sub­si­dies are an­other con­cern. “It is com­pet­ing with a dif­fer­ent war chest. They are giv­ing away free beer. Their mar­ket­ing bud­gets are hun­dreds of what ours are… i am a big be­liever that the best beer is the beer in front of you, but still.”

The founder of Ar­row Fac­tory Brew­ing, Will Yorke is a wiry English­man and one of the more cere­bral brew­ers in China, though when we meet he is car­ry­ing a box of freshly picked straw­ber­ries that he grin­ningly tells me he plans to mash up to make a keg. Our con­ver­sa­tion takes in Ger­many’s beer pu­rity laws, whether his role as brewer would be ac­cept­able to Bud­dhist prac­tice, and the eco­log­i­cal ethics of grow­ing hops (they use a lot of wa­ter). He of­fers a thought­ful anal­y­sis of AB Inbev’s en­try.

“A lot of peo­ple feel that…it is very cyn­i­cal. It’s not au­then­tic. But then AB Inbev are not in the busi­ness to be au­then­tic or any­thing else,” he ar­gues. “The next prob­lem is what AB Inbev ac­tu­ally plan to do… they need to please the share­hold­ers. They need to make money… i think they ac­tu­ally have a whole con­cept of dis­rupt­ing the mar­ket. If they do in­tend to erad­i­cate these small play­ers, whose liveli­hoods and whose pas­sion is brew­ing beer, then it is a very bad thing. It is not cool.”

Many say that Zx Ventures, the sub­sidiary of AB Inbev in charge of craft ac­qui­si­tion in China, is in­ten­tion­ally set­ting out to do this. Feel­ings run high on the mat­ter. “Zx Ventures are in charge of dis­rup­tion craft beer in the mar­ket… they own all of the AB Inbev craft beer port­fo­lio. And up un­til two months ago their web­site said, very clearly that their goal was to dis­rupt the in­ter­na­tional craft beer mar­ket,” scowls Set­zer. “But re­ally that was just them be­ing hon­est for one minute, as they deleted it from the site.”

Zx Ventures did not re­spond to re­quests for com­ment, but ad­mits on their site that “Zx Ventures is con­stantly as­sess­ing, test­ing, and in­vest­ing in con­tem­po­rary so­lu­tions and tech­nolo­gies that have the po­ten­tial to dis­rupt our core busi­ness.” There is no doubt AB Inbev has the po­ten­tial to grab a large mar­ket share: While it is rel­a­tively straight­for­ward for a small brew­ery to open a tap­room and re­tail their beer, find­ing a se­cure long-term lease is tricky—and when it comes to dis­tribut­ing whole­sale, it is very dif­fi­cult to sell beer na­tion­wide.

Chi­nese reg­u­la­tions state that, in or­der to get the rel­e­vant qual­ity


stan­dard cer­tifi­cates, brew­ers need to bot­tle in the re­gion of 12,000 bot­tles an hour—an an­nual out­put of beer sim­ply too dif­fi­cult for any small brew­ery to pro­duce, of­ten mean­ing they must out­source the process to a larger con­tract-brewer, mak­ing it dif­fi­cult to en­force their high stan­dards. This is not prob­lem for AB Inbev, who can sim­ply ex­port beer to China bot­tled un­der Amer­i­can stan­dards, or in­vest in mega-brew­ing fa­cil­i­ties that can bot­tle over 200,000 units an hour with­out break­ing a sweat. It’s hard for independent brewer to com­pete in vol­ume, mar­ket­ing, and on a whole host of other met­rics.

An­other re­ported prac­tice of AB Inbev is to of­fer lu­cra­tive deals to bars, clubs, and restau­rants to stock only their prod­ucts. For bars run­ning on small mar­gins, such of­fers, it is claimed, are too good to turn down; once again the independent brewer is squeezed.

When he first ar­rived in China, Michael Jor­dan, Box­ing Cat’s mas­ter brewer, was met at the air­port by a gag­gle of young bas­ket­ball fans, who be­came dis­traught to meet a burly, softly-spo­ken beer brewer from Spokane, Washington, rather than a six-foot-six for­mer Chicago Bulls megas­tar. Jor­dan was at Box­ing Cat for sev­eral years be­fore the buy-out, and is de­fen­sive about the sale.

“It is a tough sit­u­a­tion. Any brewer who is re­ally a brewer just wants to fo­cus on mak­ing great beer. End of story,” he says. “The own­er­ship causes dif­fer­ent emo­tions from dif­fer­ent rea­sons. What I have seen so far is a de­sire to grow craft beer in China and there are more re­sources now, than if we were to do it all our­ it is maybe al­low­ing us to push aside some bar­ri­ers; that maybe there is that ad­van­tage.”

“We are hir­ing lo­cal peo­ple, all that stuff. I guess it is a global com­pany that has their head­quar­ters else­where, so that takes away that whole lo­cal per­cep­tion.”

Many independent brew­ers are adamant that once AB Inbev get their hands on a brew­ery, it can no longer be con­sid­ered “craft.” Ac­cord­ing to the Amer­i­can Brewer’s As­so­ci­a­tion, if a com­pany pro­duces more than 6 mil­lion bar­rels a year, or is more than 25-per­cent owned by a non-craft brewer, it can­not be con­sid­ered craft (Box­ing Cat ob­vi­ously fails the lat­ter test, which is also en­dorsed by the Craft Beer As­so­ci­a­tion of China). But the def­i­ni­tion seems self-serv­ing: Six mil­lion bar­rels is a huge amount when the US only pro­duces about 200 mil­lion a year.

“Goose Is­land’s not brewed in Chicago. Box­ing Cat no longer meets the def­i­ni­tion of Amer­i­can craft beer. But they still call it craft beer here. It’s not craft…it’s a lie,” Set­zer in­sists. “[When Zx] were try­ing to make some sort of a ges­ture to us, [their be­hav­ior] was so ab­hor­rent and so against ev­ery­thing that we suf­fered… that the temp­ta­tion was not, ‘Oh, do we take the money or not?’”

“The temp­ta­tion was to make a big­ger scene about it, and in­vite the scru­tiny of one of the largest dis­trib­u­tors in China, some­one who has mas­sive in­flu­ence over the fu­ture reg­u­la­tion of my own in­dus­try [and] straight-up has thugs on the street. Do I in­vite that kind of scru­tiny? Do I make a big deal out of it?”

Given that only a month ago, Set­zer took the mi­cro­phone be­fore a large crowd of Bei­jing beer drinkers and an­nounced “F*ck [Zx] for try­ing to take my mo­ment,” this seems a moot point. Whether cus­tomers feel as strongly as Set­zer is not, though. Most are con­cerned with the sim­ple, beau­ti­ful act of get­ting drunk; it is less likely they care who pre­pares their poi­son.

Yet there will al­ways be a mar­ket for purists, or those who seek the more bizarre con­coc­tions (Chi­nese beer in­fused with ba­con, peanut but­ter and jelly, and Sichuan pep­per­corn all ex­ist, as do bai­jiu beers). “Beer is the lan­guage of hu­mans,” rhap­sodizes Yorke. “It’s some­thing that can be shared by peo­ple of any back­ground…it the uni­fy­ing, it’s the…well, what­ever.”

A lo­cal rev­eler en­joys a flagon of lager with a for­eign vis­i­tor dur­ing the Qing­dao Fes­ti­val in 2017

The Qing­dao In­ter­na­tional Beer Fes­ti­val is Ts­ing­tao's ban­ner an­nual cel­e­bra­tion, but some com­plain that it lacks in­ter­na­tional brands—and craft beer

Slow Boat was one of the first brew­pubs to open in Bei­jing, and now serves over a dozen va­ri­eties of beer

Lo­cally An­to­nio owned Bor­tone’s brew­pubs Mary and have Her been Lit­tle quick Lamb to (1870), jump a on carve the craft mar­ble beer statue band­wagon col­lected by the Hangzhou Euro­pean Art Mu­seum

The Qing­dao Fes­ti­val is cel­e­brated from Aug 4 to 27 at var­i­ous venues through­out the coastal city

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