Americans and Canadians have been enthusiastically drinking craft beer for nearly three decades, and now the Chinese are eager to join the pub crawl.
Beer sommeliers in both North America and China say the craft beer market is attractive to China’s emerging middle class. “Garrett Oliver, Brooklyn Brewing [brewmaster] is fond of saying [craft beer is] an ‘affordable luxury,’” Rick Green, author of “The Great Hop Forward: Exploring China’s Craft Beer Revolution” based in Vancouver, told CAIFU Thursday, Sept. 15, 2016.
Although craft beer lacks the status of wine tasting or Scotch whisky sipping, Green continued, its appreciation requires all the sophistication of wine tasting but at a fraction of the cost. “The craft beer phenomenon is not a fad,” he added. “It’s a cultural transformation being driven by a generational shift in the consumer market.”
Gao Yan, owner and brewer at Master Gao Brewing in Nanjing told CAIFU Thursday, Sept. 8, 2016 he believes the demand for craft beer will keep growing as the next generation of urbanites start consuming flavoured alcoholic beverages and ciders. “Given its nearly 1.4 billion population, China will definitely be craft beer’s next frontier.”
Considered a pioneer in China’s craft beer industry, Gao is the founder of the country’s first licensed craft brewery. While living in States for nearly 15 years, he was exposed to the craft beer phenomenon beyond Samuel Adams, a popular American microbrew from New England.
Upon his return to China in the late 2000s, he wrote “Get Your Own Brew,” the first Chinese book on home brewing, as well as opening a small brewery in his hometown Nanjing with the hope of the trend catching on China.
Master Gao’s Baby IPA is holding a fair market share, Gao said, but the Chinese still prefer imported beer to local crafts. Belgian wheat beers have been in China for around 20 years, experts explained, while the Chinese are currently fond of German pilsners, India Pale Ales (IPAs) and American beers.
Tsingtao Beer, one of China’s flagship brews, is one of the most popular domestic beers. According to Bloomberg BusinessWeek, Tsingtao is also number two worldwide, with a massive 2.8 percent share of the global beer market.
The average beer consumption in China is 34.2 litres per capita per year, slightly higher than the world average of 33 litres, according to the U.S. Department of Agriculture.
In the coming years, analysts forecast that Chinese consumers will not only drink more beer, but also gravitate toward more refined and expensive options as their palates mature. Social media’s influence will also play a role. By 2017, China is likely to overtake the United States as the world’s largest consumer of beer, according to Euromonitor, a London-based market research firm.
“Craft beers will become a necessary part of daily fine dining and leisure lifestyle in China,” Darren Guo, managing director of NürnbergMesse China in Shanghai, told CAIFU Wednesday, Sept. 14, 2016. “Craft beer reflects sophistication of consumers who are well educated, and looking for quality of life and establishing good taste.”
Those who are leading the trend say China’s beer industry is entering a new era, and it finds itself needing to satisfy a new set of cravings among millennials, while baby boomers are trading up to premium brands.
“More and more people are expecting innovative and creative products,” Guo said. “Craft beer had spread fast all over China and it is important in the whole context of the food and beverage industry. Combining Chinese and Western cuisine, craft beer can also play an important role for food pairing by combing Chinese and Western cuisine. [People are adapting] a craft beer lifestyle and an attitude of enjoying beer.”
Brewed In China
Craft breweries, like Master Gao in Nanjing, have sprung up across China in the 21st century. According to Green, there are now around 110 craft breweries in the country, about as many in all of British Columbia. Some of China’s most popular craft breweries include Boxing Cat Brewery in Shanghai, Great Leap Brewing and Jing-A Brewing in Beijing and Young Master Ales in Hong Kong.
Shangri-La Highland Craft Brewery opened its doors in 2009 in Yunnan province, with founder and chairman Songtsen (Sonny) Gyalzur wanting to adhere to German beer brewing purity laws – his beer’s only ingredients are barley, hops and water.
He said he was eager to develop beers using highland barley grown on farms near the city instead of rice. The alpine water surrounding Shangri-La is pure – not polluted – and full of rich minerals, rendering it one of the best raw materials to brew beer, he added.
“Our only goal was to create jobs and to share the idea of ‘real’ beer to our customers,” Gyalzur told CAIFU Monday, Sept. 12, 2016. “…Our team has accumulated more than 80 years’ experience in professional brewing.”
Some craft breweries are adding ingredients, like ginseng, jasmine, kumquat, lychee, purple rice red rice koji and Sichuan peppercorns to give craft beer a Chinese flavour. Guo said he is confident beer drinkers around the world will embrace new tastes coming from Asia, as if they developed a craving for Chinese cuisine during the past century.
“Craft beer drinkers in general are curious about exploring new beers,” Gyalzur stated. “… But Chinese beers will have to nd their own taste profiles. They might tend to a lighter taste and maybe less hoppy. Over time, the distinction of a Chinese craft will be more clear. But it will take time. It is harder to make a good light beer. …It is our goal China craft will earn its place on the international beer style map. We can definitely keep up with the quality of Western beers.”
While the metropolitan areas along China’s East Coast – like Beijing, Shanghai and Shenzhen –are currently the leading cities to drink craft beer in, the trend has exploded in the past ve years in other Chinese cities like Chengdu, Dali, Qiqiha’er, Xi’an and Xiamen, Green noted.
A bottle of craft ale costs around $4.60 USD (30 yuan) in Shanghai at press time, around 10 times more than the cheapest mass-market beers from Tsingtao Brewery. However, cost will not deter Chinese craft beer consumers, who say they will travel and spend the money for a unique drinking experience. Traveling across China, beer aficionados will nd each city has a different beer culture.
“Shanghai is the perfect regional base for importing international craft beers,” Guo explained. “It could also be the platform for Chinese craft breweries to cooperate with international brewing masters to produce their own products, to be innovative and to be creative.”
Guo said he foresees the craft beer movement will move quickly across China. “It certainly won’t be happening in one region like Shanghai, Shenzhen or Beijing – it will spread across the country at different speeds.”
An Evolving Beer Culture
Premium beers are expected to make up over a third of the $80 billion Chinese market by the end of the decade, experts say. Currently, import and craft beer sales are growing 40 percent annually in China, while online beer sales are averaging 70 percent, Gyalzur said.
“What happens within the next few years can have a major impact on how China’s craft beer scene will evolve,” Green said. “China is at the early stages of this development. When it reaches a critical mass, the challenge to meet demand may be considerable. …The need for specialty malts, a range of hop varieties, and various yeast strains already cannot be met domestically. Significant investments will need to be made by Chinese growers, and producers if they are to benefit from the coming boom.”
“Craft beer will no longer be rare to nd by 2020,” Guo said. He asserted many brands would be on menus in China’s numerous restaurants, bars and hotels by 2025.
While Gao has predicted the Chinese import and craft beer market will have a 5 percent market share, along with 4,000 brewery pubs across the country by 2020, Gyalzur has forecasted the market will generate around $2 billion USD in annual revenue for brewers all around the world.
Green said he sees an exciting growth opportunity in the world’s largest beer market, but there is a possibility the craft beer revolution could be halted. “By 2020, we may only see the opening of more brewpubs throughout the country,” he said. “Their production capacity may fall far short of being able to meet potential demand. It is possible that the profits from the excess demand will go to foreign breweries exporting to China instead.”
Alternatively, China may follow the path taken by Japan, South Korea and British Columbia, he theorized. “I can envision China becoming internationally recognized for its distinct form of craft beer, as pioneered by the likes of Boxing Cat, Great Leap, and Jing-A,” Green concluded. “When Chinese restaurants abroad begin offering imported craft beer next to Tsingtao on their menus, then the transformation will be complete.”