The Thirsty Dragon

Rob Symes

If you had to list the great beer drinking nations of the world, it’s unlikely that China would make the list, but it’s now estimated that the country has overtaken the US as the largest market for beer on the planet, with an annual expenditure of USD $80 billion. Only tea – a longtime staple – is consumed in larger amounts. This shouldn’t be surprising, as 1.4 billion people can consume a lot of anything, but it is telling that beer has usurped more traditional choices, and that with its increase in popularity, a small craft revolution has ensued.

Beer in China goes way back. 9,000 years ago, intrepid brewers were taking rice, honey and fruit and fermenting a primitive liquid that would be barely recognizable for modern consumers. Tastes changed, and rice wine held sway for millennia until a wave of investment by German, Russian, Czech and Japanese companies saw beer return to Chinese shores at the turn of the twentieth century.

Try stopping it now. Growth has been explosive and the craft segment has risen by 25% in the past couple of years. This reflects changing tastes in the country, and a greater desire for experimentation and quality. North American markets have also been growing at a steady pace, but China is remarkable because the average price of a bottle of craft beer is ten times that of the cheapest mass-produced lager.

Much of the change has been spearheaded by younger consumers who have demonstrated a willingness to expand their taste beyond the traditional staples. This has led to more craft bars, bottle shops and festivals, which then act as a catalyst for further growth. It’s also spurring change amongst national brewers like Tsingtao, who have introduced premium brands and bars with curated lineups beyond their standard options.

The nascent craft beer market is also an opportunity for some of the world’s larger craft brewers, as well as major industry players who have craft as part of their portfolio. Goose Island is becoming easier to access because of Anheuser Busch’s increased activity in China, and the megabrewer replicated their North American approach by buying up a local craft producer, Boxing Cat. BrewDog and Brooklyn are also making moves in the market, and it’s clear that this is only the tip of the iceberg.

Despite all of this, the craft beer revolution is only just getting going. Premium beers (which include craft) only make up a third of the market, and many consumers still aren’t willing to make the price jump, which helps explain why China drinks a quarter of the world’s beer, but produces only 3% of the world’s beer profits. It’s not hard, though, to see echoes of our own past in China’s current situation. Turn back the clock a couple decades and North American conditions were extremely similar, which makes China’s future all the more exciting. With 200 craft brewers taking their steps as of 2017, imagine the output both in terms of quantity and quality once the world’s biggest nation becomes a fully mature country of craft beer drinkers.