The rapid growth of craft beer in the US faces two major challenges in China: Chinese consumer preferences and cultural differences.
Whether it’s Snowflake, Qingdao, Budweiser, or the lethal Usu, the beers consumed by ordinary Chinese people are industrial beers. The main advantage of industrial beer is its low cost.
Traditional brewed beer undergoes a lengthy fermentation process, while industrial beer shortens this cycle to increase yield and efficiency. Traditional brewed beer contains a significant amount of yeast and has a shorter shelf life. Industrial beer uses filtration, sterilization, and other technologies to reduce yeast content and extend its shelf life. Industrial production has brought lower-cost raw materials, higher output, and longer shelf life to beer, but it has lost the flavor and quality associated with traditional brewing. The difference between traditional brewed beer and industrial beer can be likened to freshly squeezed juice versus juice drinks. We hope you understand the analogy.
In China, beer is considered an imported product. The key to successfully promoting and rapidly popularizing industrial beer in China is its low price.
The higher cost of craft beer naturally leads to higher prices, which is the first challenge craft beer faces in the Chinese market. Just like comparing fresh juice, juice drinks, and concentrated juice, the cost is nearly ten times higher without even debating about taste. The promotion of fresh juice and concentrated juice should be based on the growth of market purchasing power. The same applies to beer.
Craft beer and cultural differences
In addition to price, cultural customs are also a major factor that differentiates the Chinese and American craft beer markets.
Americans drink craft beer everywhere. Craft beer can be found on bar counters in New York City, on market vans in Seattle’s Ballard farmers market, on supermarket shelves in small towns in Ohio, and listed on menus in countryside pubs. According to the National Craft Beer Association, there are over 6,000 craft breweries in the United States alone!
Going to a bar in the United States is akin to eating hot pot in Northeast China (Lu string), Sichuan, and Chongqing. It’s a popular choice for friends to spend time together and bond. Whether it’s celebrating good news at work (such as a promotion or salary increase) or drowning sorrows over relationship problems, drinking plays a significant role. Similarly, in China, you can find many barbecue stalls in Northeast China and hot pot restaurants in Sichuan and Chongqing across the country and countryside.
In Denver, there are over 300 craft beer bars, outnumbering McDonald’s restaurants! Consequently, the proliferation of bars has become the primary channel for beer sales. As competition among bars increases, more beer brands and flavors are needed for differentiation. These bars serve as the breeding ground for the development of craft beer culture in the United States.
By comparison, the industrial beer market holds a 99% market share in China. China Resources Snow, Qingdao Beer, Anheuser-Busch InBev, Carlsberg, and Yanjing Beer dominate the market.
What about craft beer?
The answer to this question presents an enticing opportunity.
Most entrepreneurs in this industry prefer to take their time, sticking to the spirit and techniques of craftsmanship rather than creating something purely for popularity. Opening bars, launching new products, and diligently maintaining old-fashioned, artisanal operations in one’s own city are interesting and respectable endeavors that provide consumers with a wider range of taste choices. However, a concern remains—how many craft brewing brands can establish stability and profitability in a single city’s market, especially since their prices usually don’t exceed double that of industrial beer?
Growth in the craft beer industry has slowed in the United States, but there is still a clear upward trend in China. With the increasing number of Western-style barbecue bars, craft beer bars, boutique supermarkets, and convenience stores, craft beer has begun expanding its presence in China.
