Chinese Craft Beer Demographics – Whose Buying?

I was having an interesting discussion about Chinese craft beer demographics. It was with a potential client looking to open a brewpub.

This was in a tier 2 city. So, behind tier one and new tier one cites, which is a total of 19 cites. The likes of Beijing, Shanghai, Shenzhen, Wuhan and Chengdu.

The client was insisting the brewpub should cater to the expats and foreigners. This particular city is known for its large Korean and Japanese communities with expats from other countries at not unsignificant levels.

assess in the brewery

So, it might make sense to some to cater to this market. I mean chances are they have money with their salaries being in the upper middle-income bracket.

However, I argued that the drinkers you want to target are the Chinese middle-class and young professionals if you were to open a brewpub. Was I right to suggest this?

The Expat Population Drain

In many cities within China, we have seen the expat population decrease quite significantly with Covid-19 only speeding up this process.

China has evolved, with its population taught and trained to fulfil jobs that historically went to expats.

This has led to it being harder for foreigners to get jobs here (I am based in China). The level of education an expat needs to be able to get job here has increased.

Without a degree and/or other qualifications, it’s hard for even a native English speaker to get a teaching job in China. This goes for many expats in a broad range of industries.

Without holding a degree, obtaining a job on the Chinese mainland has bcome much harder if you’re coming from overseas.

I am not against this, it’s merely an observation. The Chinese population should fulfil local jobs if they’re qualified for the position.

With higher tier job comes greater salaries which, in part explains the growing middle-class population in China.

Chinese Beer Market
China’s Middle Class Has Grown Significantly

Chinese Middle Class – China’s Craft Beer Demographics

China’s economic development over the last few decades has been staggering. You just have to look at Shenzhen.

A world class city, that was little more than fishing village just 40 years ago. In 2019 it was listed in Lonely planets top 10 cities to visit worldwide.

This boom in the economy has led to a growing middle class throughout China combined with Chinese taking higher tier jobs.

Middle-class income households are those that have enough money for their primary needs (such as clothing, food and shelter) with extra for savings and consumption.

In 2000 the middle class was estimated to be just 3% of the Chinese population. In 2018, that number was over half the population! So, in under 20 years the middle-class grew by 47%+ in China.

This growing middle class presents economic opportunities. Furthermore, I believe should be the target demographic to help grow craft beer sales in China.

Not foreigners and expats – if you’re opening up a brewpub for example.

Micro-Brewery Setup Costs - Location

The Middle-Class in Numbers

According to Pew’s, China’s middle class has been the fastest growing in the world. They said 667.9 million more people were part of the middle class in China in 2018 compared to 2000.

To put that into perspective the numbers for other BRIC countries were:

China – 667.9 million (3.1 to 50.8 percent)

Russia – 62 million (28.2 to 71.5 percent)

Brazil – 54.8 million (30.3 to 51.4 percent

India – 64.8 million (1.2 to 5.7 percent)

Most of China’s growth was in the lower middle-class bracket. With 68% of middle-class falling into the lower-middle class economy bracket. In Sweden for example that figure is only 11% so it isn’t all great new but…

Craft Beer Sales in China

As I stated in another article on my site about the future of Chinese beer sales, the price per unit of beer is going up.

Pleas take a look at the graph below:

China Beer Sales Revenue Growth

As you can see the price per liter in the beer segment is US$1.71 in 2020. The price per unit has seen a 15-cent rise in out of home sales.

This can be linked to rise in premium beer sales. As the middle-class grows, so their drinking habits evolve too.

A burgeoning Chinese middle-class has led to a growth in overseas tourism, more outward looking lifestyle choices and these people still like to socialize.

With a greater disposable income, they can afford to look beyond cheaper domestic macro-brands to premium imported or local craft beers.

In cities like Beijing, Shanghai plus other tier 1 and 2 cities you can see premium imported brands advertised everywhere plus a growth of local craft beer producers.

Chinese Craft Beer Demographics – Increase in Craft Breweries

I first came to China in 2010, craft beer was still in its infancy back then. According to Statista there were 103 craft breweries. In the graph below that number had grown to 178 by 2016.

These numbers have exploded since. I know of 30 craft breweries in the city of Kunming (in Yunnan) alone. With at least 3 more craft breweries planned in the city in the next year.

I would estimate at time of writing (November 16th 2020) that there at least 500 craft breweries in China. I don’t have exact figures but when I see craft breweries in 4th and 5th tier cities, I know the numbers are exploding.

China still has a long way to go. In the US craft beer sales make up 12% of all beer sales. Local craft beer producers have a long way to go before they can upstage the likes of Snow or Tsingtao.

China’s Craft Beer Demographic

However, when we see breweries such as Southern Sloth opening in the likes of Jingdezhen. We can see craft beer is spreading its tentacles through China, to a more discerning well paid middle-class.  

Even AB InBev is Getting in on the Act!

Even AB InBev, have bought into the Chinese craft beer scene. With the purchase of local craft brewery, Boxing Cat plus opening Goose Island brewpubs.

With AB InBev aim to disrupt the Chinese craft beer market as they look to overcome losses in sales in more mature markets such as the US.

Chinese Craft Beer Demographics – A Conclusion

As millennials and the middle-class continue develop a taste, for stronger and more flavorful craft beers, these are the people Chinese craft brewers should target.

So, if you make good beer then the expats will come and drink too. They will follow the quality. The aim of craft breweries in China is to make good quality craft beer, target the middle class plus millennials.

And know that foreigners and expats will follow if the product is good too.

So, as a brewing consultant in China, I would still recommend targeting the middle-class and millennials if I were to grow a craft beer brand.

Cheers

Neil

Asian Brewing Consultant Pouring Some Beer "Badly" in The Cellar

If you have any htoughts, feedback or experiences on this subject or craft beer in general then please feel free to comment below.

I would love to read other people’s thoughts and experiences on the subject of craft beer and/or China.

Please note: all statically visuals were taken from Staista.com. Other sources were China Power and Medium.com

Neil Playfoot

Neil is a brewer with 25 years international brewing experience. Based out of China (first came in 2010) he works as a brewing consultant helping brewers with their projects and brewing processes. To find out what services Neil can provide your brewery please click here. If you'd like to contact Neil you can email at neil@asianbeernetwork.com.
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Rick Green

30 craft breweries in Kunming??? Never come across a source that has that many. That’s about the size of Jiuhuar’s list of bars for Kunming, of which most are not brewing and includes bottle shops. I wonder if Dazhong Dianping has all of them? Seems like I have some catching up to do! Care to share your list? The China craft brewery list I’ve compiled, which includes Hong Kong and Taiwan, is currently at 414. I know that’s incomplete, as I have leads to follow up on. Nevertheless, I believe some sources overstate the numbers since they base their research… Read more »