"Two Chinas in the Vegetable Market" Era of Segmentation This video comes from a live speech by Chu Yin on "Orator," which, by observing the scene of selling vegetables, clearly explains that China is currently in an era of segmentation, dividing China into two worlds, vividly illustrating the changes in China's consumer market. The term "segmentation" was a buzzword in Japan in the 1980s, roughly referring to a divided public. Consumers in this period cared about either high prices or cheapness. Japan's 60s generation was born into a relatively affluent social environment, being the most "bubble" new generation. Born in a golden age, they began to pursue quality over quantity. In a word, "happiness upon buying things." In the 1980s, the Japanese market industry frequently used a term: "more upscale." Even instant noodles had to be premium. This might be what we are experiencing now as the so-called comprehensive "consumption upgrade." In the era of segmentation: It is difficult for one brand or category to dominate the world. Understanding of brands gradually shifts from material possession to spiritual enjoyment. It can also be said that this era is the era of the disintegration of traditional brands. The formation of a community of consumption environment and consumption concepts is also based on factors such as demographic changes and changes in corporate employment patterns. The brand belief that deifies the product itself is declining, replaced by viewing items as a means, placing more emphasis on the purpose achieved through this means, that is, what kind of connection one establishes with what kind of people. This trend of brand abdication is inevitably a headache for traditional large enterprises, but it is also an opportunity for new startups. In traditional cognition, the basic functions of a product have become standard. What consumers will need in the future is truly a direction we need to think deeply about. Returning to Chinese beer, we must start from several dimensions: First, open the history of Chinese beer. Second, the characteristics of global beer. Third, the basic situation of beer in the three worlds in China. Fourth, judgment on future craft beer development trends. Opening the History of Chinese Beer Many people say Chinese beer is an imported product. But through research, it is found that the history of Chinese beer and Chinese liquor (baijiu) is almost the same, but Chinese liquor has not been interrupted, while beer has been interrupted! If we don't look at history, it's hard to know the future. The first year of Chinese beer is 1900. From a global perspective, the oldest beer was produced around 1040, nearly 1000 years earlier than Chinese beer. Before 1900, there was almost no trace of industrial production of Chinese beer. Western countries took 978 years to develop beer to where it is today, while China only took 118 years. Many people criticize Chinese beer for being cheap and nothing else, but this should be viewed from both sides. In 1949, when New China was founded, the total output of Chinese beer was only 7,000 tons, which today would not even be enough for half a county's consumption, while baijiu was 108,000 tons. At that time, being able to drink beer was as glorious as drinking Moutai. In 1980, the total output of Chinese beer reached 800,000 tons, while baijiu production capacity reached 2.2 million tons, meaning beer was still scarce. At that time, at a wedding banquet in Beijing, if there was a bottle of beer on the table, it was equivalent to a 15-year Moutai today. In 1985, the total output of Chinese beer reached 3.1 million tons, and baijiu production capacity was 3.3796 million tons. The gap between the two was closing rapidly, but beer was still scarce and still lower than baijiu. In 1988, the first year of the second great leap forward for Chinese beer, the total output of Chinese beer reached 6.54 million tons. In the development process of the surrounding years, explosive growth occurred, resulting in 2,700 beer production enterprises in China at that time, equivalent to one brewery in every county in China. The existing breweries were all born in those years (1986-1988). In 1993, the total output of Chinese beer reached 12.25 million tons, ranking second in the world in output. In 1994, Snow Beer was born. In 1997, the acquisition history of Chinese beer began, with Snow Beer starting the land grab. In 2000, the total output of Chinese beer reached 22.31 million tons. In 2002, the total output of Chinese beer reached 23.86 million tons, becoming the world's largest beer producer in tonnage. In 2013, China's beer output reached its historical peak of 50.61 million tons. In 2014, a turning point appeared in the Chinese beer industry, with the first decline in recorded history, lasting for four years. Looking back at history, we find that Chinese beer and Chinese liquor have always been accompanied by each other. On one hand, Chinese beer went from scarcity to overtaking baijiu (in volume). On the other hand, Chinese beer successfully carved out a large share of the market from baijiu. Overview of Global Beer First, we can see that in the global beer ranking, Budweiser is first, with a global market share exceeding 30% after acquiring SABMiller (latest data). The second-ranked Heineken is now allied with domestic China Resources Snow. It is not impossible that the third-ranked Carlsberg might join forces with domestic Tsingtao Beer. Looking at the global beer market structure, the top six may still undergo subtle changes in the future. Second, before Budweiser acquired SABMiller, its own profit share was equivalent to the total of Carlsberg, Heineken, and SABMiller combined. After acquiring SABMiller, Budweiser's profit share is equivalent to the sum of profits of the 3rd to 10th ranked companies, or even more. If Budweiser is an alien, there is no chance of direct confrontation at the corporate level. But Budweiser must abide by Chinese government rules in China: it cannot increase holdings where it shouldn't, and it cannot expand where it shouldn't. The above is the ecological structure at the top of the beer world's food chain. Basic Situation of the Domestic Beer Market Early Chinese beer was dominated by mainstream beer. Simply put: the five giants hold 80% of the share. Since 2010, imported beer began to appear, carving out an independent category. Around 2013, craft beer began to sprout quietly, also forming an independent world. Mainstream Beer Mainstream beer is distributed first in Asia, with 34% of beer consumed by Asians. Among them, China accounts for 24% of the world's share. The top three countries in the world for drinking are the Czech Republic, Germany, and Austria, all in Europe. But in Harbin, China, per capita consumption exceeds Germany, second only to the Czech Republic. The second largest beer consumption market in China is Shenyang, and the third is Qingdao. China's overall per capita consumption is not high. Theoretically, Chinese beer still has a lot of room for growth. But China's beer has two natural enemies: baijiu and beverages. They will share the market cake with beer. Of course, beer consumption per capita is closely related to the economy. For example, per capita consumption in Africa is very low, and consumption in India is also very low, though this is also related to religious factors. Regarding the concentration of mainstream beer in China, you will find that Qingdao Beer in Shandong can achieve a market control rate of up to 80%. Many brands have a single-brand control rate exceeding 30%-50% in some regions. If the control rate reaches 80%, it's like the American model; 30% is like the Japanese model; below 30% is like the German model. And the Chinese model is unlikely to converge to any single country's model. China will not develop like a single country's beer development model, but the development models of various countries can find corresponding shadows in China, because each province in China is larger than a European country. China is so large that it encompasses the world. If we develop the Chinese beer market according to a single model, we will not succeed. Although China's beer market sales continued to decline in 2018, it is worth noting: in which segment did it decline? What declined is volume; what rose is sales value. What we find truly declining is low-end beer. In 2015, China's total beer volume declined by 5.6%, of which ultra-high-end grew by 18%, high-end grew by 9%, mid-range grew by 3.8%, and low-end declined by 10.8%. The growth rate of the mid-to-high-end market is much higher than the industry average. By 2020, mid-to-high-end beer sales will account for 36% of total beer sales. So in the past two years, we will find that mainstream beer as a whole is raising prices and adjusting product structure, showing a trend towards high-end development. Imported Beer Imported beer began to enter China in batches in 2010, from an initial 67,000 tons to about 700,000 tons in 2018, nearly tenfold in eight years. The rapid development of imported beer is due to policy promotion on one hand, and changes in consumer demand on the other. We will find that German beer was the first to enlighten the Chinese beer market. In 2015, German beer accounted for 60% of all imported beer. But by the end of 2017, the share of imported German beer fell from 60% to 30%. However, the total volume of imported beer is growing, with beers from all over the world entering the Chinese market. The top imported beers all belong to Budweiser, like a deck of 54 cards, with the jokers and even key good cards in Budweiser's hands: Hoegaarden, Franziskaner, Corona, Modelo, Guinness, etc. Among them, Corona has the largest growth among imported beers. Looking at the global beer market structure, the good cards are all in Budweiser's hands, triggering collective thinking among domestic major brands: can their own brands resist the fierce Budweiser? Budweiser has laid out 20 ultra-high-end brands in the Chinese market, with global sales exceeding $1 billion. Domestic brands found they had no equivalent or competing products, and based on strategic considerations, this led to the cooperation between Snow and Heineken. There is a saying in the industry: Germans play with malt, Belgians play with yeast, Americans play with hops, and Chinese play with water. These four ingredients are essential elements for brewing beer. When traditional domestic beer rushes towards water, imported beer moves towards alcohol. The vast Chinese beer market has diversified demands. When everyone is moving towards water, there is a viral product called Wusu Beer. You will find on e-commerce and some special channels that people specifically order Wusu Beer. The trademark represents "get you dead" (a pun), drinking is just drinking, very pure. When one thing evolves eastward, there must be opportunities in the west. So the opposite direction of mainstream beer is your opportunity. It's like riding a bicycle on the same road as a large truck; driving in the opposite direction is safest. The more you drive parallel, the higher your risk. Craft Beer

  1. Currently, China's first batch of homebrewers come from returnees and hobbyist groups. The homebrewing community in the US numbers in the millions, mainly hobbyists, with weakened commercial aspects. China has relatively fewer.
  2. Brewpub craft beer is set against restaurants and food. In the past two years, the development of brewpubs has seen many openings and many closures, with everyone exploring a model. Chinese consumers and beer styles are inseparable from food. Western-style dining may not necessarily promote the development of China's beer industry. People will first choose something delicious, then something tasty to drink. In terms of the development of "bars" in China, the south is higher, and the north is weaker. China's real "bars" are not drinking in bars; people go to barbecue stalls and roadside shops, which are China's natural "bars." In Western countries, drinking is separate from eating. Our economy has not yet developed to the stage of separating eating and drinking; it is still integrated. When the economy develops to a certain extent and eating and drinking are separated, brewpub craft beer will become an opportunity, but the timing is unknown.
  3. Factory craft beer. In the past two years, the homebrewing community has gradually increased, brewpubs have risen and fallen, and the most active are craft beer enterprises backed by factories. Two years ago, such enterprises were very difficult because everyone was still producing low-end beer. With the upgrade of high-end beer consumption, factory craft beer enterprises have become extremely active, with exponential growth in craft and high-end products. Consumers are beginning to accept specialty, flavorful, and even distinctive beers. Consumers' personalized and fragmented demands are intensifying. Before 2015, there were 380 large-scale beer enterprises in China. In 2016, the number of beer production enterprises established in one year was equivalent to the total number of beer enterprises established in the past decade. That year saw blowout growth. As mentioned earlier, traditional beer rushes towards water, imported beer moves towards alcohol. A category moving towards flavor has appeared. Some people think craft beer is high alcohol content, but that is not the case. The biggest feature of craft beer is definitely flavor. Flavor is the core of craft beer. It is unconventional, highly creative, and anything can be added. Don't think that making a high-alcohol beer is craft. It is full of personality, imagination, and even weird, niche, non-standard beers. Why is American craft IPA so popular? It is precisely because the bitterness of IPA is too high, and hops give beer the soul of flavor. Prediction of the Future of Chinese-style Craft Beer
  4. Consumption upgrade and the craft beer movement are proceeding simultaneously. Consumption upgrade does not exclude the simultaneous high-end development of large breweries.
  5. High-end and craft are proceeding simultaneously. Whoever changes faster and meets consumer needs will win. Whether it is a large or small brewery, who can solve consumer needs is unknown.
  6. The dividend of Chinese-style craft beer lies in the creation of scenarios. Here, it must be emphasized that I do not agree with China applying the standard model of American craft beer development; this carries certain risks. There will definitely be a Chinese-style craft beer development path, with the core being flavor and consumer demand.
  7. American-style craft beer has a long way to go in China, unless large beer enterprises cultivate the Chinese market.
  8. Chinese-style craft beer is the sum of specialty beers. From an official perspective, it is defined as "workshop beer," but "workshop beer" has not been fully recognized in the industry. Source: New Beer (ID: newbeer_BJ) Registration channel is now open. Long press the QR code below or click "Read Original" to register. The opening class is limited to 100 seats, first come, first served! Click here to register in one click