---
title: "China's Beer Industry Finally Has a New Story"
description: "After a decade without new narratives, China's beer market is seeing a resurgence driven by premiumization, with craft beer and fresh beer gaining traction and supply chain models emerging. While the top five giants still dominate, new players are influencing the industry's direction, promising a more segmented market."
author: "杨伟"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2023-06-17"
language: "en"
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# China's Beer Industry Finally Has a New Story

> After a decade without new narratives, China's beer market is seeing a resurgence driven by premiumization, with craft beer and fresh beer gaining traction and supply chain models emerging. While the top five giants still dominate, new players are influencing the industry's direction, promising a more segmented market.

For the past decade, there have been no new stories in China's beer market.
As major industry mergers and acquisitions ended with the conclusion of the growth era, the five giants holding 80-90% of market share were busy dealing with the industry's counter-cyclical downturn that began in 2013, while smaller players struggled to survive in the cracks, barely making their presence felt.
As the current recovery, centered on premiumization, gradually takes effect, the high premiums in the beer industry have led "bystanders" to see market opportunities and dive in.
**Craft beer takes center stage, and fresh beer rises through scenario-based consumption.** Channel players like Haidilao, Helen's, and Hema Fresh have entered with supply chain models, leading to a small-scale "blooming of a hundred flowers" in the beer market.
Can craft beer achieve the same status in beer as sauce-flavored liquor has in baijiu? How can fresh beer break through the ceiling of its shelf life and sales radius? Will the supply chain model restructure the beer industry ecosystem?
These new stories, though unable to change the industry landscape in the short term, **are attempting to influence the direction of the tide in the beer industry.**
**The Rise of Craft Beer**
Craft beer is a concept relative to industrial beer. It uses pure malt and long fermentation to achieve a higher wort concentration, ensuring a rich flavor.
The concept of craft beer became popular in China around 2012. This was a special period—**after China's beer production peaked in 2013, it declined year after year, freeing up some market space for craft beer.**
At that time, consumers were tired of the taste of domestic industrial "beer water," and the market needed a catfish to stir things up. A small wave of craft and imported beers arrived.
Industry data shows that from 2013 to 2020, the compound annual growth rate of craft beer consumption was as high as 35%, running counter to the overall beer market. In the past two years, as the beer industry recovered, craft beer has led the way.
In recent years, thousands of companies have entered the craft beer track, spawning numerous brands such as Niupitang, Panda Brew, Master Gao, and Great Leap. Among them, the most prominent is Ubrew, known for its craft beer + new retail concept.
Li Qing, a seasoned beer enthusiast, traveled through Europe and was impressed by the local beer. With support from the globally renowned beer producer Kronenbourg, he founded Ubrew in Handan, Hebei, at the end of 2013.
In just a few years, Ubrew, with its **"pioneering brand of craft beer house new retail,"** swept through barbecue restaurants and crayfish shops nationwide, opening over 2,000 stores in 800 cities and counties.
In recent years, consumer investment in the primary market has been relatively sluggish, but craft beer remains one of the few hot tracks. From 2021 to 2022 alone, at least 20 craft beer brands received funding, including Bishan Village, AB Art Craft Beer, Songren Dan, Fanbo Craft Beer, and Shiqimen.
Facing the deepening trend of craft beer, the industrial beer giants, once seen as the opposition, have also joined in. In 2019, Carlsberg invested in the craft brand Jing-A, Budweiser successively acquired Goose Island and Boxing Cat, and Yanjing Beer launched the high-end craft brand Lion King on the basis of its V10 craft white beer.
Moreover, the heat of the domestic craft beer market has also boosted the beer equipment manufacturer Lehui International, which unexpectedly entered the scene in the previous years of the beer market.
**Fresh Beer Takes the Lead**
If you often go out for late-night snacks, you've likely encountered Taishan Original Pulp, a fresh beer product. Although it's pricey and has a short shelf life, fresh beer has a rich and full flavor and is also called "health beer" because it's rich in nutrients and active yeast.
A popular saying in the beer circle goes: **"Once you enter fresh beer, it's as deep as the sea; from then on, industrial beer is a stranger."**
Just as consumers now prefer NFC juice over concentrate and fresh milk over shelf-stable milk, a large portion of beer enthusiasts will choose fresh beer first—it's likely to become the next hot concept after craft beer.
This trend has directly created the revival story of Taishan, an old beer manufacturer.
Taishan Beer was formerly the state-owned Tai'an Brewery, established in 1979. In the wild era of "one city, one beer" in China, there were at least several hundred such breweries.
With industry giants like China Resources Beer and AB InBev continuously expanding, and with Qingdao Beer being unshakable in the same province, Tai'an Brewery struggled and was sold to Hucai Group in 2000.
Following the old path would surely lead to death. Taishan Beer introduced German technology, produced China's first original pulp beer, and on that basis launched the fresh beer category. It also abandoned the traditional distribution model and built its own channels through franchising. Differentiated products + proprietary channels + proprietary logistics allowed Taishan Original Pulp to achieve "30-minute fresh delivery."
After its resurgence, market rumors suggest Taishan Beer is planning a Hong Kong IPO to raise $200-300 million. If it successfully lists, it will be **the only new player in over a decade to break through the blockade of the traditional five giants.**
The popularity of fresh beer products like Taishan Original Pulp in the terminal market has not only touched traditional manufacturers like Qingdao Beer but also attracted a wave of startups. In the past two years, brands like Ruien and Jingdu Fresh Brew have secured funding.
**Supply Chain Model**
Brands like Yanjing and Qingdao Beer have leveraged the new channel of beer houses to achieve leaps in product value and company performance.
Various new retail channels, including hot pot restaurants, beer houses, and even supermarkets, have also set their sights on beer, especially the growth category of craft beer.
It's hard for many to believe that Haidilao's own-brand beer, priced at 12 yuan per bottle, sells several hundred million yuan annually. Combined with its strong profitability, it has become one of the stable profit points for this catering company—similar to popcorn in cinemas.
Haidilao is unlikely to build its own brewery. These products are based on the supply chain model common in other industries, with craft breweries acting as OEMs.
The same story is happening at Hema Fresh. This new retail giant tested craft beer in 2018 and has launched 10 craft products as of last year. By early 2021, it reached nearly 100 million yuan in monthly sales, and has maintained high growth year after year. During this year's May Day holiday, its craft fresh beer sales increased 108% compared to the week before the holiday—if Hema Fresh were to spin off its craft beer business, it would be no less than small and medium-sized beer manufacturers.
Industry data shows that compared to the gross margin of about 40% for industrial beer, **craft beer has a gross margin of 70%-80%**, close to the profitability of high-end baijiu. Even with a supply chain model like Haidilao's or Hema Fresh's, they can achieve gross margins of 50%-60%.
Driven by such high returns, even the downstream of beer manufacturers has begun to stab beer brands in the back.
The small pub chain Helen's initially sourced branded beer externally. As the company gained a foothold and became familiar with the beer industry's operations, it began to launch its own brands through the supply chain, selling not only in its 700+ stores but also entering emerging channels like e-commerce. Own-brand beer not only yields higher profits but also deepens brand effects—why not?
**Consumption Stratification**
Of course, China's beer market is already relatively stable, and the Matthew effect will only become more pronounced. Therefore, whether it's craft beer, fresh beer, or the supply chain model under a win-win situation, they can only compete for the less than 10% market share in the cracks of the five giants.
Even so, the more innovative commercialization attempts of new players have injected new vitality into the beer industry, which has been stagnant for years—they cannot change the industry landscape in the short term, but they can influence the direction of the tide.
If it weren't for Taishan Beer, we might not be able to enjoy fresh beer so conveniently. If it weren't for the combination of craft beer and new channels, how could Yanjing Beer, which had fallen behind, become a growth king with a traditional model?
In short, the era of "beer water" for everyone is gone forever. **In the future, China's beer market will see more pronounced consumption stratification.**
China's market, with hundreds of millions of beer drinkers, is unmatched by other markets. In this world's largest beer market, mid-to-low-end circulation products will always have their value. In the future, this segment will be dominated by traditional brands like China Resources Snow, Qingdao Beer, Yanjing Beer, and Chongqing Beer.
Mainstream players in the mid-to-high-end beer market, such as China Resources Beer, Qingdao Beer, and AB InBev, have been testing ultra-high-end products in recent years. If a benchmark ultra-high-end brand like Moutai emerges in the beer market, it will certainly come from these three leading companies.
In this typical pyramid-shaped beer market, the mid-to-high-end segment in the middle, balancing scale and profitability, is the most attractive and the most competitive. Traditional beer giants hope to stabilize their base in this market, while new beer forces want to seek breakthroughs here.
Of course, the most important thing is that when the water is big, the fish are big; when the fish are big, the water is lively.


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