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Beer - China - December 2018

OVERVIEW
What you need to know
Covered in this Report
Excluded
EXECUTIVE SUMMARY
The market
Retail volume will decline in the next five years
Figure 1: Best- and worst-case forecast for beer, by retail volume, China, 2013-23
Premiumisation trend may sustain retail value growth
Figure 2: Best- and worst-case forecast for beer, by retail value, China, 2013-23
Companies and brands
Top brands retain leading positions
Figure 3: Companies’ shares of the retail value market, China, 2016 and 2017
AB InBev communicates beer culture through various channels
Microbreweries personalise craft beer for Chinese consumers
The consumer
More than half of consumers are interested in trying craft beer
Figure 4: Penetration of regular and craft beer, China, September 2018
Leading brands retain high brand penetration
Figure 5: Selected brands’ penetration, China, September 2018
Food companion is the main role for beer
Figure 6: Beer’s consumption occasions, China, September 2018
Brand acts as a quality assurance
Figure 7: Primary factors consumers value when choosing beer, China, September 2018
Beer from Germany, US and Japan has the most penetration
Figure 8: Origin of beer consumed, China, September 2018
Craft beer is a symbol of premium beer in consumers’ perspective
Figure 9: Perceptions of craft beer, China, September 2018
What we think
ISSUES AND INSIGHTS
Local giants can think about collaboration with foreign brands
The facts
The implications
Craft beer has to engage consumers by building the culture
The facts
The implications
Figure 10: Pictures of Goose Island craft beer and store style on dianping.com
Use seasonal products or limited editions to drive consumer curiosity
The facts
The implications
Figure 11: Beer in Japan with claim on limited edition or seasonal – with the seasonal theme
THE MARKET – WHAT YOU NEED TO KNOW
Market volume will not grow in tandem with market value
Build the culture to make consumers appreciate the taste
Strong beer will be the future opportunity to drive more value
MARKET SIZE AND FORECAST
Retail volume will decrease at a slow rate
Figure 12: Best- and worst-case forecast for beer, by retail volume, China, 2013-23
Hopefully the retail market value will continue its growth
Figure 13: Best- and worst-case forecast for beer, by retail value, China, 2013-23
MARKET DRIVERS
Local leading brands are speeding up the premiumisation
Communication on beer culture and understanding more of tasting beer
Figure 14: Tsingtao’s tasting tips for wheat beer, China, 2018
Relaxed regulations on imported beer bring more choice to the market
MARKET SEGMENTATION
Acceleration in new product launches for strong beer
Figure 15: Proportion of new beer product launches, by segment, China, 2013-18 (Nov)
Figure 16: Best- and worst-case forecast for strong beer, by retail value, China, 2013-23
Premiumisation and target marketing push standard beer to grow
Figure 17: Best- and worst-case forecast for standard beer, by retail value, China, 2013-23
Slow growth in light beer
Figure 18: Best- and worst-case forecast for light beer, by retail value, China, 2013-23
KEY PLAYERS – WHAT YOU NEED TO KNOW
Leading players continue dominating the market
Mergers and acquisitions will be the future trend in this market
Innovation in packaging and functional beer for more occasions
MARKET SHARE
Leaders retain their leading status in the market
Figure 19: Companies’ shares of the retail value market, China, 2016 and 2017
AB InBev penetrates the market through various channels
COMPETITIVE STRATEGIES
Local brands are updating their premium product profile
Figure 20: Tsingtao’s Augerta beer uses premium claims to connect with consumers, China, 2018
Figure 21: Pure draft beer by Snow has been repackaged to Jiang Xin Ying Zao, China, 2018
Budweiser disseminates beer culture through immersive theatre play
Figure 22: Budweiser’s beer-themed theatre play "Finding Mr. X", China, 2017
Microbreweries attract consumers by utilising local ingredients
Figure 23: Examples of beer brewed with Chinese ingredients, 2018
WHO’S INNOVATING?
Open with lid could bring new experience to beer drinking
Figure 24: Harbin launched Jing Xue Ice with pulled ring, China, 2018
Figure 25: Mike Hess Brewing’s open mike cans with pull-off lid
Beer advent calendars for holiday gifting
Figure 26: Examples of beer advent calendars in Austria, Netherlands and the UK, 2018
Niche flavours through cross-category collaboration on beer brewing
Figure 27: Examples of cross-category collaboration beer, US, 2018
High-protein beer for post-workout gym-goers
Figure 28: Examples of beer with high protein
Opportunity for new retail for beer
Figure 29: Ab InBev’s demo of an unmanned beer store, China, 2018
THE CONSUMER – WHAT YOU NEED TO KNOW
Beer is still mainly seen as a food companion
Lower brand loyalty but brand valued as an indicator of quality
Craft beer can try more to penetrate into tier two and three cities
PENETRATION OF REGULAR AND CRAFT BEER
Stable usage of beer between 2017 and 2018
Figure 30: Penetration of beer, China, 2017 and 2018
Male and female craft beer core users vary by age
Figure 31: Penetration of regular and craft beer, by age and gender, China, September 2018
Craft beer is better accepted in tier one cities, not surprisingly
Figure 32: Penetration of craft beer, by city tiers, China, September 2018
White-collar workers are potential key consumers for craft beer
Figure 33: Penetration of craft beer, selected, by employment, China, September 2018
BRAND PENETRATION
Leaders are always leaders and even become stronger
Figure 34: Selected brands’ penetration, China, September 2018
Income level is the determining factor of consumers’ brand choice
Figure 35: Selected brands’ penetration, by household income level, China, September 2018
Regional brands execute great influence in their own battlefield
Figure 36: Selected brands’ penetration, by region, China, September 2018
Beer drinkers in their 40s skew towards one type of beer brand
Figure 37: Numbers of beer brands consumers have tried, selected, by age, China, September 2018
DRINKING OCCASIONS 
Food companion as the main role for beer
Figure 38: Beer’s consumption occasions, China, September 2018
Entertainment pulls beer consumption more in tier one cities
Figure 39: Beer’s consumption occasions, selected, by city tier, China, September 2018
More occasions to drink for young female consumers
Figure 40: Beer’s consumption occasions, repertoire, selected, by age and gender, China, September 2018
FACTORS INFLUENCING PURCHASE DECISION
Brand is the guarantee for quality when purchasing beer
Figure 41: Primary factors consumers value when choosing beer, China, September 2018
Focus on brand as a primary factor declines while age decreases
Figure 42: Factors consumers value when choosing beer, selected, by age, China, September 2018
Attention to ingredients shows interests in different beer styles
Figure 43: Secondary factors consumers value when choosing beer, China, September 2018
20-39-year-olds differentiate beer style by ingredients used
Figure 44: Factors consumers value when choosing beer, ingredients, by age, China, September 2018
Indication from non-top factors
PREFERENCE OF ORIGIN
German beer is the most popular, followed by the US and Japan
Figure 45: Origin of beer consumed, China, September 2018
Figure 46: Examples of claims used by German beer brands
Figure 47: Special brewing method used by Pilsner Urquell from Czech Republic
Figure 48: Example of product emphasising its origin and uniqueness, China, 2017
Foreign beer has high penetration in South and North
Figure 49: Usage of beer from selected origins, by region, China, September 2018
PERCEPTIONS OF CRAFT BEER 
Consumers are willing to pay a higher price for craft beer
Figure 50: Perceptions of craft beer, China, September 2018
Figure 51: Example of differentiation of craft beer and regular beer by Urbrew
A definition of craft beer can help with long-term market growth
MEET THE MINTROPOLITANS
Higher interest in Carlsberg and Budweiser
Figure 52: Selected brands’ penetration, by consumer segmentation, China, September 2018
MinTs pay more attention to ingredients used in beer
Figure 53: Primary factors consumers value when choosing beer, by consumer segmentation, China, September 2018
Figure 54: Secondary factors consumers value when choosing beer, by consumer segmentation, China, September 2018
MinTs are active in trying beer from different brands
Figure 55: Numbers of beer brands consumers have tried, selected, by consumer segmentation, China, September 2018
APPENDIX – MARKET SIZE AND FORECAST
Figure 56: Value sales of China’s beer retail market, 2013-23
Figure 57: Volume sales of China’s beer retail market, 2013-23
APPENDIX – MARKET SEGMENTATION
Figure 58: Value sales of China’s beer retail market, by segment, 2013-23
Figure 59: Volume sales of China’s beer retail market, by segment, 2013-23
APPENDIX – METHODOLOGY AND ABBREVIATIONS
Methodology
Fan chart forecast
Abbreviations

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