E-Malt.com News article: China: The dominance of the 20 leading brewers has accelerated

Consumption of Beer in China has increased by 39% since the year 2000 and by an incredible 144% during the last decade, beverage industry analysts Canadean has recently posted into their latest report. This explosive growth has proven increasingly attractive to domestic and international brewers alike who have sought to either strengthen their existing positions or enter the market. As a result of the considerable consolidation that has taken place, the dominance of the 20 leading brewers has accelerated. Their combined market share has risen by more than twenty percentage points in the last four years alone!

The recent announcement linking the Fujian Sedrin Brewery with a number of international groups provides further evidence of the continued aggressive consolidation taking place within China’s booming Beer market.

According to a brand new report from leading beverage industry analysts Canadean, many of the larger domestic brewers have acquired their smaller rivals. The purchase of Qianjiang and Lion Nathan China by CRB, Tsingtao’s alliance with Nongken and Yanjing‘s new majority stake in Zhejiang Xiandu represent just a few examples.

The global brewers have also been highly active. Anheuser-Busch increased its own shareholding in Tsingtao and purchased Harbin Brewery, Heineken acquired stakes in Guangdong and Jiangsu Dafuhao whilst InBev bought Zhejiang Shiliang and Golden Lion’s Chinese Beer interests.

Competition forcing smaller players to review options…

China is the world’s largest producer of Beer but, despite the exceptional growth in demand, there is huge over capacity in the market. Production capabilities continue to expand but already exceed consumption by an estimated 40%. Nearly every brewer has been drawn into fierce price competition at a time when the cost of ingredients such as barley has risen. Margins have been squeezed ever tighter with survival becoming increasingly difficult for some smaller players. Many of these may well be forced to explore mergers as the only viable alternative to closure.

Warmer near the top…

Imports have generally struggled to penetrate the market and locally produced Beer accounts for over 96% of consumption. Mainstream Lager dominates but the Premium segment is advancing rapidly. Competition in this higher end of the market has also intensified and many brewers have enhanced their offerings with the addition of new Premium products. The popularity of Speciality Beers has also increased, particularly among trendy young professionals.

Beer drinking in China remains very much an urban phenomenon. The country’s surplus rural workforce is moving towards the major cities, attracted by the huge number of jobs that have been created by the economic boom. The speed at which this migration continues to take place could well become a major driver of future growth. The distribution of Beer should also improve further as the retail infrastructure develops apace along with the number of restaurants, bars and clubs. This said, consumption is predicted to increase by around 8% during 2005 and by a further 30% by the year 2010.


18 November, 2005