Beer sales in China are expected to increase to 49 billion liters in 2016, boosted by premium brands.(Photo: China Daily/Zhao Bing)
Beijing-based market research group Daxue Consulting says the increase will be boosted by sales of premium brand beers, reflecting increasing opportunities to capitalize on the growth of the premium segment.
Even though demand for craft beer is increasing, the segment remains in its infancy, with producers saying that sourcing materials, particularly malts, hops and yeasts, are one of their biggest challenges. But some help appears to be on the way.
In November, the United Kingdom signed a $151 million deal to export 150,000 tons a year of barley to China over the next five years, mostly to tap into the country's appetite for premium beer.
"This indicates that the market is becoming more mature and there is a wider offer of choices for us and for customers," said Will Yorke, co-founder of Arrow Factory Brewing.
Chandler Jurinka, owner of Beijing-based Slow Boat Brewery, says trade deals for beer ingredients are crucial for the nascent industry.
"When we first started doing business, we could barely get anyone interested in selling barley to us," Jurinka said.
Slow Boat opened in 2011 using an investment of $1.3 million raised in part with the help of angel funding from family and friends.
Nowadays, the microbrewery, which has its own taproom in Beijing, ships its beers across China.
Slow Boat now sells 250,000 liters of artisanal beer, having registered a 300 percent year-on-year growth in revenues in 2015.
Brewery officials complain that there is still a very limited selection of locally produced grains and hops available for nonindustrial brewers.
"The hops we are using are almost 100 percent from the United States. Meanwhile, grains come from Europe and New Zealand," Jurinka added.
Still, China's agriculture is undergoing some important changes that could benefit local craft brewers.
"We have been contacted by some nongovernmental organizations that are helping farmers repurpose land for high-quality grains. So, there is something happening in that respect," Jurinka said.
The brewery is using domestic ingredients such as herbal tea, spices from Guangzhou and honey from Yunnan province to give a local taste to their brews.
"The craft revolution that everyone seems to be talking about is not only about the boom of high-alcohol and highly flavored beers," Jurinka said. "The revolution is all about localizing a global product."
Great Leap, one of the leading establishments in Beijing's craft scene, puts a special emphasis on sourcing local products whenever possible for its beers. The brewery signed an agreement with China National Cereals, Oils and Foodstuffs Corp, the country's largest food association.
"COFCO supplies 100 percent of our base malts. For hops, we are also using Qingdao flower, which is the closest thing you can get to an indigenous Chinese hop here," founder Carl Setzer said.
Setzer, from the United States, opened Great Leap Brewing in 2010 near Houhai and in 2013, in order to meet increasing demand, inaugurated his largest brewpub in the capital's trendy Sanlitun area with an investment of $1.1 million.
Great Leap Brewing now has the capacity to produce 5.5 million liters and expects 2016 to be its biggest year ever thanks to adding a second location.
Setzer sees the increasing popularity of microbrewing culture in China as a direct consequence of the ongoing economic and social changes in the country.
"Craft brewing is an example of where China wants its economy to go in the future. They don't want mass produced and low-margin goods. They now look for something that is high quality and representative of the new China," he said.
