E-Malt.com News article: China: Imported products could fill the gap in the Chinese alcoholic beverage market

China’s beer industry is entering a new era, and it finds itself needing to satisfy a new set of cravings. Millennials make up a third of the country’s population and they are switching to imported premium brands, flavoured alcoholic beverages and ciders, Rabobank said in a report this month.

China’s millennials are fast emerging as decision-makers with increasing purchasing power. Traditional narrow product offerings domestically have left a gap in the Chinese alcoholic beverage market which could be filled with imported products.

“Chinese consumers see imported premium beers as part of a modern lifestyle and an adventurous experience, in which they can try new flavours and brands. The continuous growth of imported beer is reflective of the rising demand by consumers for trading up,” says Rabobank Food & Agribusiness Analyst Katherine Song.

The leading beer exporter to China is Germany, followed by the Netherlands then Belgium, and France ranked fourth, says the Rabobank report. Imported beer sells at a relatively high price compared to local beer, and as a result, it offers more profit to distributors and retailers.

Flavoured alcoholic beverages have taken off among younger consumers. Brands producing flavoured alcoholic beverages (FAB, also known as RTDs) are targeting millennials since they tend to prefer drinks with low alcohol content to spirits.

“With the underserved Chinese millennial consumers, FAB is positioned to gain market share from spirits, beer and even soft drinks. In 2014, FAB’s growth rate outperformed that of all other alcoholic drink categories, with 100 percent year-on-year growth,” says beverage analyst Song.

Despite craft beer’s success in North America, the category is still negligible in China since most Chinese consumers have yet to discover true craft beer. “We think craft beer can help to answer consumers’ desire for premium products. The first step for brewers is to increase the availability of craft offerings, and to invest in educating consumers to create awareness of the variety in the craft beer culture,” says Song.

In this new era, mergers and acquisitions are expected to take place beyond regional beer brands. “International players should take advantage of the rapid expansion of e-commerce and help to penetrate China’s beer market with more imported products,” says Song. “It won’t be long until China’s top five beer companies get more involved and change the competitive landscape in the country’s beer industry.”


13 May, 2015