US Insights

World Cup Fuels China's Craft Beer Boom

Martin Guo

Editor-in-Chief, Kantar China Insights

Brands 06.26.2018 / 09:00

ChinaCraftBeerwang-xi-485184-unsplash

China’s craft beer market is growing by 40% annually. Kantar and WPP experts summarize some main trends of the category.

The 2018 FIFA World Cup is well underway in Russia. The time zone difference is much more favourable for Chinese fans compared with previous tournaments, as most games happen during evening prime time in China. It has also become a boon for Chinese late-night food delivery business.

China’s leading food delivery company Ele.me and Baidu Take-away have announced that during the first four matches, an average of 400,000 bottles (cans) of beer were ordered per game, with total late-night orders tripled than the same time last year. The proportion of craft beer significantly jumped.

Man In Brewery

Craft beer is one of a handful of bright spots in the overall sluggish beer industry, both in China and globally. According to US-based Brewers Association, overall US beer volume sales were down 1% in 2017, whereas craft brewer sales continued to grow at a rate of 5% by volume, reaching 12.7% of the US beer market by volume. Craft production grew the most for microbreweries.

Retail dollar sales of craft increased 8%, up to $26 billion, and now account for more than 23% of the $111.4 billion US beer market. These statistics use the craft brewer definition of small, independent and traditional.

According to Chinese media The Paper, China’s craft beer sales has been growing at 40% annually since 2015.

The following are some main trends of the craft beer category that Kantar and WPP experts have summarized.

1. Two main trends in the craft beer category

One of two leading-edge trends we are seeing in the craft beer category is new focus being put onto ingredients other than hops (and adjunct flavourings). Specifically malts and yeasts. Specialty, local malt roasters are adding nuances to their products and flavour profiles. Riverbend Malt house in Asheville, North Carolina, is a good example. It is a quality malt maker that pledges to provide the area’s craft brewers with locally farmed, artisan malts.

Another trend is the continued preference toward food pairings—following the rituals of wine. White Labs, the largest yeast manufacturer, has opened a production facility and tap room with a gourmet kitchen. You can purchase the same beer made with different yeast strains to enjoy different flavour profiles. Of course, the wild yeast (sour beer) trend continues as well, with appeal to female consumers.

Beer VCG

In addition to ongoing demographic changes driving the growth of craft, brewers in the US expect the legalization of marijuana to influence beer drinking. Some brewers and alcohol producers are exploring marijuana-flavoured beers. Constellation Brands, which distributes Corona in the US, bought a stake in a Canadian marijuana company.

2. Craft drinkers pick variety over loyalty

There is a difference between how the mass beer and craft customers shop. A Bud drinker, for example, is typically loyal to Bud and not too interested in being offered other options. That person wants to pick up the beer and get on with his shopping. It is fine to merchandise beer in cases to this shopper because that meets his need. In contrast, the craft drinker, by definition, likes variety, likes to try new things. It’s harder to build loyalty. To that beer drinker, craft is about what he or she believes it to be. It’s not about who owns the brand. The craft beer could be brewed down the street for limited distribution. Or it could be available in many countries.

3. Craft beer brands value independence

From a marketing standpoint, what was interesting this year is that the independent craft brewers are trying to take that long tail and get branding to promote themselves nationwide with some consistency. Many US micro brewers joined an association and displayed the organization’s seal on their packaging to confirm authenticity and differentiate from mass craft beers.

In a recent development, equity players purchased local craft brewers. A typical example is that ABI has acquired Goose Island, the Chicago-based craft beer and bought a controlling stake in Boxing Cat, one of China’s best-known craft brewers. Having acquired many craft beers, ABI generally preserved their independent management. Its strategy is to bring local craft beers to the global market. As such, Goose Island is now available in much of the US and overseas in several European markets, including the UK, and in China and South Korea.

Source: Kantar Millward Brown

Editor's Notes

* This article is edited based on the content from page 178 - 185. Intern Gretchen Yuan also contributes to this article;

* The BrandZ Top 100 Most Valuable Global Brands report and rankings, and a great deal more brand insight for key regions of the world and 14 market sectors, are available online here ;

To speak with the author or for inquiries, contact us. Follow @Kantar and sign up for our insight alerts.

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