Beer represents 75% of the total amount of alcohol consumption (by volume) in China.
To succeed in this lucrative market, knowledge of the consumer segmentation is important.
Beer Market Segmentation in China
These are the locally brewed beers, mostly lagers, with low alcohol percentage (around 3%). Currently, the largest brand names in China are Snow, Tsingtao, Yanjing and Harbin. Low priced, they are consumed by people across all income levels. Most drinkers prefer to sip them while having meals.
While the new generations of Chinese beer drinkers are becoming more adventurous in trying out foreign brews, the mature consumers remain loyal to domestic beers. The local brands are still very popular throughout China. Whether in the North or South, consumers still prefer their trusty Snow or Yanjing, with an occasional Budweiser or Carlsberg.
In the past years, the Chinese’s increasing expectation on quality, value and service has opened many opportunities for foreign breweries. Leisure beers have higher alcohol content and are more expensive than local brands. Urban and high-income consumers prefer to drink them at home or in bars, as standalone or accompanied by finger foods.
This market segment took the largest part of the total beer import in China in 2017. Other big brand names are Corona, Heineken, Guinness and Duvel. It is a growing market that is expected to bloom in the coming years.
This market has grown significantly due to the drinkers’ shift from macro/mass-consumed beers to more premium and craft flavors. Craft beers’ rise in popularity is mainly attributed to the millennials and the growing middle class in China. They are usually consumed either with Western-style meals or as stand-alone beverages.
These beers are quite expensive compared to the other two segments, but have quite a loyal following. Currently, there are few options in the market. Most of the available ones are acquired and distributed by Anheuser-Busch InBev, the world’s largest beer producer. Cities like Beijing, Shenzhen, Guangzhou and Shanghai are also home to a number of local foreign-owned and Chinese-owned micro-breweries.
Marketing Strategies for Breweries
Most Chinese consider the taste of a beer as their primary reason for choosing it. Next considerations are price and accessibility. Brand loyalty is very much present among the more mature drinkers, but the younger ones are known for frequently switching brands. For less popular breweries, this lack of brand awareness among millennials is a huge opportunity.
The Chinese consumers often have the misconception that all foreign beers are bitter, like German dark beer and India pale ale, when in fact, there are those with mild, fruit and crisp tastes. Still, tailoring the brews to local taste preferences could attract more consumers.
Small breweries tend to have more success by focusing on a local community. Forming partnerships with a local store or restaurant will help make the products more accessible to buyers.
Beer festivals and in-store tastings are still effective in promoting products, but standing out among competitions can be a challenge. Social media advertising has become a powerful way to reach all types of consumers, especially in creating brand awareness.
Nowadays, Chinese consumers buy almost everything online. 30% of their purchases are done using online platforms. Companies will benefit from having an online store, but they must maintain a good e-reputation. Giving out rewards and coupons to entice buyers may also boost sales.
With China’s beer imports growing by double digits every year, the right time for foreign companies to tap into its beer market is now. Having a clear market development strategy based on Chinese consumers’ preferences should be number one on their agenda.