Page 298 - 2020 White Paper on the Business Environment in China
P. 298
0 White Paper on the Business Environment in China
willing to pay more for better quality wines, similar been decreasing, mainly due to the decrease in
to the quality of quality trends in Western markets. production and consumption of the Chinese mass-
The volumes may have fallen in 2018, but the value consumed beer segment. With the development
rose by 2.8 percent. Another explanation for the of the economy, Chinese consumers’ purchasing
dip of volume is that the market is still digesting power keeps rising. Consumers gradually tend to
the large volumes of wine imported prior to 2018. choose beer with high quality instead of low prices.
The latest data shows that China is beginning to The increasing demand for more premium beer
look like a mature market. The imported wine offerings in China is being driven by the country’s
drinking population is still growing, but not at the young, middle income consumer segment, with
same rapid growth of previous years. The general the tier one cities of Beijing, Shanghai and Tianjin
consensus among trade experts is that the market offering the greatest volume of this consumer
has a positive outlook despite declines in volume group, as well as large numbers of bars and
because consumers seem to be more engaged restaurants for the distribution of more premium
with the wines they are buying. Meanwhile, alcohol offerings. First-tier cities represent the
the market is diversifying and becoming more largest share of the imported alcohol market
fragmented. While France still leads the market of in China. However, with economic expansion
imported wines, its share is declining as consumers and changing lifestyles, entering lower tier
turn to wines from other countries and regions. markets can be a more viable alternative for new
Producers are also exploring different options entrants. Chinese breweries in these areas tend
to reach consumers such as the internet, social to be regionally fragmented, with local producers
media and direct-to consumer channels (Arthur). dominating smaller markets. In recent years, it
has been common for larger beer manufacturers
Classic craft beer continues to be a competitive to acquire smaller local manufacturers in order to
alcoholic product in China, and attracting more increase their market shares. For these reasons,
sales, import and foreign investment. “Craft and because of strong support for domestic
beer” is a trendy phase for beer consumers in manufacturers, foreign manufacturers may find it
China, particularly in searching online. Chinese hard to invest in the beer manufacturing segment.
consumers are developing a taste for the brew and Therefore, joint ventures and acquisitions are the
has become more accepting of flavors differences. best way to enter the Chinese market (AAFC).
Today, imported beer shows substantial growth
in China and is very competitive with domestic Soft Drinks, Bottled Water, and
brands. New lifestyle trends are also boosting Sports Drinks
imports craft beer to China, as China craft beer
insider predicting to see a 30 percent growth in In spite of multinational players’ long-established
the beer market through 2020 (DCCC). Meanwhile, brand recognition and relatively larger share, local
as global beer sales have stalled, major brewers players are leading soft drinks’ growth and innovation
are flocking to China. The value of beer sales in as multinational players suffer from transformation
the world’s most populous country is surging due and localization issues. Chinese original soft drinks
to the growing popularity of premium products. are coming back strong by making the tradition
According to UK research specialist Euromonitor, fashionable again. Colorful sodas packed in classic
the volume of beer sales in China totaled around bottles with vintage stickers were the new trendy
45 million kiloliters in 2018, down about 10 percent accessory in 2019, not just as a thirst-quenching
from 2013. In value terms, however, beer sales in drink, but a nostalgic sensation. International
China surged nearly 40 percent over the same brands such as Coca-Cola and PepsiCo dominate the
five-year period to about US$93 billion, thanks soft drinks market in China today, as children have
to rising unit sales prices, driven by the growing grown up drinking Coke, Pepsi and Fanta, among
popularity of premium beers. (Watanabe). other big-name beverages. But for the generation
who grew up in the 70s, 80s and 90s, carbonated
The Chinese mass-consumed beer market soft drinks were much more different and diverse.
has matured over the years. During the last few The latest trend of classic Chinese sodas is led by
years, the volume of the total beer market has Hankow Er Chang, a new brand born from an old-
298
willing to pay more for better quality wines, similar been decreasing, mainly due to the decrease in
to the quality of quality trends in Western markets. production and consumption of the Chinese mass-
The volumes may have fallen in 2018, but the value consumed beer segment. With the development
rose by 2.8 percent. Another explanation for the of the economy, Chinese consumers’ purchasing
dip of volume is that the market is still digesting power keeps rising. Consumers gradually tend to
the large volumes of wine imported prior to 2018. choose beer with high quality instead of low prices.
The latest data shows that China is beginning to The increasing demand for more premium beer
look like a mature market. The imported wine offerings in China is being driven by the country’s
drinking population is still growing, but not at the young, middle income consumer segment, with
same rapid growth of previous years. The general the tier one cities of Beijing, Shanghai and Tianjin
consensus among trade experts is that the market offering the greatest volume of this consumer
has a positive outlook despite declines in volume group, as well as large numbers of bars and
because consumers seem to be more engaged restaurants for the distribution of more premium
with the wines they are buying. Meanwhile, alcohol offerings. First-tier cities represent the
the market is diversifying and becoming more largest share of the imported alcohol market
fragmented. While France still leads the market of in China. However, with economic expansion
imported wines, its share is declining as consumers and changing lifestyles, entering lower tier
turn to wines from other countries and regions. markets can be a more viable alternative for new
Producers are also exploring different options entrants. Chinese breweries in these areas tend
to reach consumers such as the internet, social to be regionally fragmented, with local producers
media and direct-to consumer channels (Arthur). dominating smaller markets. In recent years, it
has been common for larger beer manufacturers
Classic craft beer continues to be a competitive to acquire smaller local manufacturers in order to
alcoholic product in China, and attracting more increase their market shares. For these reasons,
sales, import and foreign investment. “Craft and because of strong support for domestic
beer” is a trendy phase for beer consumers in manufacturers, foreign manufacturers may find it
China, particularly in searching online. Chinese hard to invest in the beer manufacturing segment.
consumers are developing a taste for the brew and Therefore, joint ventures and acquisitions are the
has become more accepting of flavors differences. best way to enter the Chinese market (AAFC).
Today, imported beer shows substantial growth
in China and is very competitive with domestic Soft Drinks, Bottled Water, and
brands. New lifestyle trends are also boosting Sports Drinks
imports craft beer to China, as China craft beer
insider predicting to see a 30 percent growth in In spite of multinational players’ long-established
the beer market through 2020 (DCCC). Meanwhile, brand recognition and relatively larger share, local
as global beer sales have stalled, major brewers players are leading soft drinks’ growth and innovation
are flocking to China. The value of beer sales in as multinational players suffer from transformation
the world’s most populous country is surging due and localization issues. Chinese original soft drinks
to the growing popularity of premium products. are coming back strong by making the tradition
According to UK research specialist Euromonitor, fashionable again. Colorful sodas packed in classic
the volume of beer sales in China totaled around bottles with vintage stickers were the new trendy
45 million kiloliters in 2018, down about 10 percent accessory in 2019, not just as a thirst-quenching
from 2013. In value terms, however, beer sales in drink, but a nostalgic sensation. International
China surged nearly 40 percent over the same brands such as Coca-Cola and PepsiCo dominate the
five-year period to about US$93 billion, thanks soft drinks market in China today, as children have
to rising unit sales prices, driven by the growing grown up drinking Coke, Pepsi and Fanta, among
popularity of premium beers. (Watanabe). other big-name beverages. But for the generation
who grew up in the 70s, 80s and 90s, carbonated
The Chinese mass-consumed beer market soft drinks were much more different and diverse.
has matured over the years. During the last few The latest trend of classic Chinese sodas is led by
years, the volume of the total beer market has Hankow Er Chang, a new brand born from an old-
298
