Thomas Gaestadius from Arrow Factory checks the brewing point of one of its signature craft beers at his Beijing-based plant. (Photo courtesy of Bruno Maestrini)
Local microbreweries are on the rise, creating premium drinks out of indigenous flavors for a thirsty nation with a taste for the unusual
Swedish-born Thomas Gaestadius, brewmaster and co-founder of Beijing-based microbrewery Arrow Factory Brewing, works surrounded by stainless steel tanks filled with his latest concoctions, which release a thick and pleasant malty scent.
The small brewing facility next to Liangmahe in eastern Beijing opened to the public in January, serving food and craft beer.
It was only two years ago that Gaestadius and British business partner Will Yorke started brewing on a small scale to supply their sausage restaurant Stuff'd, near the Lama Temple in the Chinese capital.
They now brew 1,000 to 2,000 liters per week, also supplying craft beer to other restaurants in town.
The business partners, who used their own savings to start the brewery, say craft brewing is a demanding business not right for everyone.
"It is an expensive business to set up and it is very labor-intensive," said Gaestadius.
"The necessary equipment can cost 500,000 yuan ($78,000) to 1 million yuan. You also need a lot of space, and getting a commercial venue in downtown Beijing is not cheap, either."
Their microbrewery is now growing organically, with most of its profits reinvested in expanding capacity to capitalize on China's new thirst for craft beers.
"It is crazy now. Both Chinese and foreigners here are increasingly interested in craft beer," Gaestadius said.
Only five years ago, China's craft beer scene was virtually nonexistent, with only 20 microbreweries operating in the country. That number increased to some 200 in 2015, putting specialty beers on the map, according to industry sources.
China's overall beer market is worth an estimated 543.3 billion yuan－the world's largest by volume at 47.5 billion liters, according to Simon Moriarty, head of emerging markets research at Mintel Research.
Craft beer, however, remains a niche product, accounting for less than 1 percent of the Chinese beer market, meaning that it is still a barely tapped business opportunity.
In 2007, Xinjiang-born Jackie Zhou opened a bar, Jackie's Beer Nest, in Shanghai to sell imported bottled craft beer after falling in love with the complex and flavorful brews.
Three years ago, he decided to turn the bar into a serious brewpub with the acquisition of specialized brewing equipment, including containers, boilers and fermentation tanks.
He calculates he invested around $80,000 to make his dream possible. Though still a small business, Zhou estimates that sales of his craft beer have been increasing by at least 30 percent a year.
Zhou, whose best-selling products include his Chinese tea pale ale and a yellow lotus seed and mushroom ale, thinks that the local industry still needs to develop its own identity. "China doesn't have its own reputation for craft beer production in the beer world. We need to try our best to change this," he said.
Despite slight decrease in sales volume in 2015 and 2014, Euromonitor International forecasts that China will see beer sales increase to 49 billion liters in 2016.
