Brewers enjoy boom times, as market continues to grow in China

As bottles of premier beer continue to fly off the shelves in China, from family eateries to trendy night spots, industry insiders say its happy hour all year round for brewers.

The country is already the largest producer and consumer of beer. Last year it had an output of about 48.99 million kiloliters, a 9.3 percent increase on 2010 and the eighth consecutive year of growth.

China became the world's No 1 beer producer and consumer last year, with its annual output reaching 48.99 million kiloliters. Euromonitor predicts the country's beer market will be worth 457.9 billion yuan by 2014. [Photo/China Daily]

Yet, more importantly, the Chinese masses are increasingly filling their glasses with pricey premium brands, including Carlsberg, Budweiser, Bud Light, Heineken and Skol.

The sector may have made up just 10 percent of overall sales in 2011 (a rise of 20 percent on the previous year), but it contributed almost 50 percent of total profit.

Euromonitor, the British-based research firm, predicts the value of China's beer industry will reach 457.9 billion yuan ($72.68 billion) by 2014, compared with 305.3 billion yuan in 2009.

"China consumes around 43.8 million kiloliters of beer every year," roughly one-fourth of the world's total, according to Stephen Maher, chief executive officer of Carlsberg China.

However, the market has some unique traits, he explained: "Research shows Chinese tend to drink beer more often at restaurants, bars and other entertainment venues, and they like to consume large volumes over a short period of time.

"It (the market) is a challenge and an opportunity, as we have to be constantly on our toes and come up with new brands that can connect with the aspirations of consumers," he said.

Carlsberg, a Danish brewer, has gained lots of local insight during its time in the market, such as the fact that people on the Chinese mainland prefer less bitter flavors, which is different from those in Hong Kong or Malaysia.

"We launched Carlsberg Chill and Carlsberg Light exclusively for customers in China," Maher said. "These beers are ideal for Chinese drinkers, unlike our flagship 'green label' brand, which is a classical European beer with a higher bitterness level.

"Chill is positioned for those seeking entertainment, and Light is for enjoyable moments. Both have well complemented our strategy of creating tailor-made beer products for Chinese consumers," he said, adding: "Connecting with consumers is core to Carlsberg's success."

Carlsberg has also benefited a great deal from its partnership with Chinese brands, including Wusu, Dali, Shancheng and Xixia.

The company owns more than 30 breweries in 11 provinces and autonomous regions, and in particular has been gaining a strong position in western regions of China since the early 2000s.

"Local brands and partners have helped establish a firm base for Carlsberg and provided better consumer insight," Maher said, adding that his company intends to nurture people's loyalty to products by retaining local brands and flavors.

In addition, Belgium-based brewer Anheuser-Busch InBev launched in November began producing its high-end brand Stella Artois in China, said John Hsu, its president of BU North Business. The company also makes Beck's, Budweiser, Corona and Harbin in China.

Wang Renrong, vice-president in Asia-Pacific for AB InBev, said he believes the Chinese market will contribute 30 to 50 percent to the growth potential of the world's beer industry in the next few years.

He also said China has been one of AB InBev's most important markets, accounting for 12 to 13 percent of its total business. "We hope the figure will be bigger, as we see huge potential here," Wang added.

Stella Artois retails at 40 yuan for a 330-milliliter bottle in the market, while most beers are priced under 10 yuan.