Craft Beer Breaks the Prisoner's Dilemma in China's Beer Industry


Picture of Panda Brew on its website


In recent years, craft beer has become more and more popular among consumers due to its rich variety, taste and personalized consumption scene.

In order to promote the standardized development of the domestic craft beer industry in China, on April 25th, the China Alcoholic Drinks Association released "Craft Beer and its Production Specifications". And this will be the booster for the development of the Chinese craft beer industry.


Small quantity but large profit

China has the largest beer market, while in recent years it has experienced a continuous decline in sales. However, craft beer has gone against the trend. Compared with traditional industrial beer, the domestic high-end beer industry market share is only 4%, but the overall profit has reached 18% of China’s beer market.

The good performance of craft beer on profit is directly connected with the higher price. In China, the retail price of craft beer is 2-4 times that of industrial beer. In the retail terminals such as bars and beer houses, the per capita consumption of craft beer is about 80-120 yuan, which makes the turnover of beer products increased by about 30%. Craft beer has become the main source of terminal profit and is favored by merchants.


Consumption upgrade

The rise of China's "middle class" has laid a material foundation for the upgrading of beer consumption; as a niche product, free and creative culture of craft beer has laid a spiritual foundation for the upgrading of beer consumption. In addition, the information age has turned the world into a “global village”, and Chinese consumers have become more open-minded and have become more and more accepting of craft beer.

The Comparison between Craft Beer and Industrial Beer

Contrast Dimension

Craft Beer

Industrial Beer

Raw Material

Water, Malt, Hops, Yeast

Water, malt, hops, leaven. Partially replace with low cost ingredients like rice, corn, starch, etc.

Taste

Adding various materials such as peppers and apples on the basis of raw materials, diversified.

Standardized, relatively single.

Fermentation Process

Mostly the Aer process, the yeast works at the top of the fermenter and floats above the liquor. The fermentation temperature is generally controlled at 10-20 °C. The fermenter is usually small and is not filtered and sterilized after the end of fermentation.

Mostly the Lager process, the yeast works at the bottom of the fermenter and sinks under the liquor. The fermentation temperature is generally controlled below 10 ° C, the fermenter is larger, and the fermentation is over. Filtration and pasteurization are usually used to increase the shelf life of the beer.

Fermentation Time

Variety, ranging from 2 days to 2 months.

Usually around 7 days.

Shelf Life

Most are short, and some have a shelf life of only a few dozen days.

1-2 years, some can reach decades.

Production Scale

Small

Large


Compared with high-end liquor, the price of high-end beer is easily accepted by the public, and it is expected to become the main product of consumption upgrade. The beer market pattern has also quietly changed under the promotion of consumption upgrade. In recent years, the production of beer has decreased and the price has increased, indicating that the beer industry has the basis for developing high-end varieties.


Problems in the Chinese craft beer market

Quality of craft beer need to be improved

Problems in terms of sanitary conditions, production process and quality control. There are also “pseudo-fine brewing” in the market. These problems will undermine the consumer experience and cast a shadow on the craft beer industry, which will eventually affect the reputation of craft beer.

Consumer awareness needs to be improved

For many consumers, the internal changes in these industries are quite unfamiliar and indifferent. In the minds of some consumers, the difference between craft beer and industrial beer is: High-priced beer and low-priced beer.

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