Craft beer, as an emerging product, has attracted large breweries and entrepreneurs with its astonishing growth rate, but only those craft beer companies that truly cater to consumers' quality needs can genuinely win the market. When it comes to summer, beer is often a topic of discussion. China consumes nearly 25% of the world's beer. In recent years, the domestic mass beer market has become increasingly saturated, but high-end beer products have shown a trend of rapid development. Against this backdrop, craft beer has developed rapidly in a short period, but the scale of China's craft beer industry remains relatively small, with craft beer consumption accounting for only 1% of total beer sales. If we want to predict where the opportunities lie in China's craft beer industry, we might look at the experience of the United States. Although craft beer originated in Europe, the rapid development of the U.S. economy has allowed its beer culture to be exported worldwide. It is no exaggeration to say that the United States has influenced the trends and directions of global craft beer development. Craft beer has become a new engine of growth for the U.S. beer industry The Brewers Association defines a craft brewery with three criteria: First, it must be "small" , producing six million barrels of beer or less annually; second, it must be "independent" , with non-craft beer manufacturers holding no more than 25% of the shares; and finally, it must be "traditional" , meaning that the majority of its alcohol content must come from traditional or innovative brewing ingredients through fermentation. Craft beer emerged in the 1960s because large beer companies, aiming to reduce costs, added additives such as corn starch during the brewing process, making the beer taste bland and tasteless. As a result, many small breweries launched a "craft beer movement," advocating for abandoning modern equipment and returning to manual operations. This was the earliest form of craft beer. However, the Prohibition in the United States dealt a devastating blow to the industry. It wasn't until 1978, when homebrewing was legalized, that the craft beer industry began to recover. Looking back at 1980, there were only 8 craft breweries in the U.S., but today that number has exceeded 6,000, and there are multiple reasons behind this. On one hand, economic development has changed the consumption structure of American consumers. Since the 1980s, the U.S. beer market has grown slowly, with per capita consumption declining. At that time, the beer market was dominated by industrial beer. The public's rising demand for quality of life provided a good opportunity for craft beer to enter the market. Compared to industrial beer, craft beer is favored by consumers for its personalized taste. However, craft beer is also more expensive than typical industrial beer. In other words, the U.S. craft beer market is based on consumers' strong purchasing power. On the other hand, the United States provides comprehensive institutional protection measures. These measures mainly include two aspects: first, a well-established association system. Shortly after homebrewing was legalized, the American Homebrewers Association was established, followed by the Brewers Association and the Beer Judge Certification Program, among others. These associations hold various events each year, including certification exams, which greatly promote the progress of the U.S. craft beer industry. Second, the legal system is well-developed, covering everything from beer label design requirements to quality standards for beer ingredients. Regulations basically cover the entire process from brewing to terminal sales, ensuring a stable competitive environment for the U.S. craft beer industry. Data also shows that craft beer has become a new engine of growth for the U.S. beer industry. According to the Brewers Association, in 2018, U.S. craft beer sales grew by 4%, while the overall beer market declined by 1%. In 2018, the craft beer market reached $27.6 billion, accounting for 24.1% of the market share. Competition Heats Up: The Rising Chinese Craft Beer Market In recent years, China's craft beer consumption has continued to rise. In 2016, consumption was approximately 390,000 kiloliters, accounting for less than 1% of the domestic beer market, but the growth rate exceeded 40%. Compared to the United States, China's craft beer industry is still very young. In the foreseeable future, with the increase in per capita disposable income, the market penetration rate of craft beer will certainly continue to rise. A report released by AC Nielsen shows that in the next 3-5 years, the share of the craft beer market is expected to rise to 3% of the total beer market, meaning that craft beer will have at least tens of billions of yuan in sales annually in the future. In 2008, China's first batch of craft breweries, such as Master Gao and Boxing Cat, were established. At the beginning, Master Gao increased its influence by organizing events, hosting national craft beer exchange activities such as the Nanjing Beer Festival and the China International Craft Beer Festival. After building the brand, it sold through online channels. Boxing Cat, another pioneer in the craft beer industry, took a different approach, focusing on offline channels such as restaurants, while also having its own beer restaurants. In 2013, Master Gao launched the first bottled craft beer in China, "Baby Fat," in bottle form, introducing the concept of craft beer to the broader industrial beer distribution channels. Subsequently, Panda Brew and NBeer Pub also launched their own bottled craft beers. Correspondingly, major breweries also began a series of layouts in the craft beer field. At the beginning of 2017, Boxing Cat was acquired by ZX Ventures, the venture capital arm of AB InBev, which was just one of a series of acquisitions by AB InBev. Domestic beer manufacturers also rushed into this field. Zhujiang Beer launched multiple craft beers such as IPA and Red Ale, and Tsingtao Beer also launched several craft beer styles in its community bars. However, the entry of large beer companies has not hindered the development of craft beer brands. Zhu Danpeng, a food industry analyst in China, believes that the craft beer industry has a typical characteristic: consumption end forces industrial end upgrades. Craft beer brands mostly serve regional markets, so from a refined operation perspective, small brands have a higher degree of consumer awareness and grasp than large enterprises. Since the introduction of craft beer, its user profile has been constantly changing. The earliest users were mainly high-income groups such as returnees. With the increase in craft beer brands and the expansion of channels, craft beer has also begun to spread rapidly, and more young people with spending power have become the main customer group for craft beer. However, even so, the price of craft beer is still 4-5 times that of industrial beer. In Shanghai's craft beer bars, prices are mostly concentrated in the range of 30-50 yuan per 330ml. Most craft beer users already had alcohol consumption habits before, so the development of craft beer is also considered a replacement for existing industrial beer stock. Currently, players in China's craft beer market can be roughly divided into three categories: the first is bars that focus on craft beer culture, such as Jing-A; the second follows the FMCG route, similar to Panda Brew and Zebra Craft Beer; and the last is vertical platforms, such as Jiu Hua Er. However, from an investment perspective, the craft beer industry has not received widespread recognition from capital. Investments in the craft beer field are still mainly in the pre-A round, with angel investments of millions of yuan accounting for a large portion. This is closely related to the uniqueness of craft beer itself. As mentioned earlier, the rise of the U.S. craft beer market relies on the improvement of customer spending power and changes in consumption concepts. The same is true in China. These changes require more time than capital catalysis. In other words, the point of explosion for China's craft beer market has not yet arrived. Pitfalls of Entering the Craft Beer Market In addition to needing time to ferment, China's craft beer industry faces a series of other issues. The following is an analysis of the maturity of the Asia-Pacific beer market from the prospectus of Budweiser Brewing Company APAC. It can be seen that the maturity of China's beer industry still lags far behind that of Japan and South Korea, and in the craft beer field, this gap will become even larger. The first issue is raw materials. The main ingredients of craft beer, such as malt, hops, and yeast, are mostly imported. Since China's craft breweries are generally small in scale, this makes it difficult for them to directly obtain high-quality raw materials, and also leads to higher raw material costs, preventing them from forming a cost advantage. Furthermore, the instability of raw materials makes it impossible to standardize the beer produced, making it difficult to achieve economies of scale, which in turn constrains the development of enterprises. Another major issue is talent. Craft beer has special requirements for personalized customization, which requires brewers to adjust product processes at any time according to different seasons, consumer groups, and equipment conditions. This is undoubtedly a great test of the brewer's theoretical knowledge and process control experience. Unlike the certification exams held by the American Brewers Association to cultivate talent, practitioners in China's craft beer industry are still mainly amateur enthusiasts, most of whom have not undergone systematic theoretical training. This is another major bottleneck for the development of China's craft beer industry. Where Are the Opportunities for China's Craft Beer Industry? So, in this fiercely competitive craft beer market, will a dominant player emerge? For new entrants, where are the opportunities for China's craft beer industry? The craft beer industry is characterized by scattered distribution and intense competition. Still using the U.S. market data for comparison, according to Boston Beer Company, among the more than 6,000 craft breweries in the U.S., the top 10 account for one-third of the U.S. craft beer market share, another one-third is shared by 120 small breweries, and the bottom 20% of the market share belongs to microbreweries with very limited coverage. Zhu Danpeng also believes that it is unlikely for a giant like Budweiser to emerge in China's craft beer industry. He said, "The nature of craft beer itself determines its 'small and beautiful' characteristics. The craft beer industry is highly regional and must be matched by the market. It is impossible to produce in Beijing and sell in Hainan. Therefore, it is destined to be small and refined." Compared to the United States, the combination of branding and terminal development may be the future trend for China's craft beer industry. That is, craft beer companies not only build their craft beer brands but also have their own managed terminal stores, cultivating consumer loyalty to the brand through their own sales channels. Because the domestic craft beer industry is still in the stage of cultivating consumer awareness, only doing branding would result in high consumer education costs, while only doing terminals would easily lead to homogeneous competition. Developing localized differentiated products is another opportunity for Chinese craft beer companies. In the highly personalized craft beer industry, it is particularly important to capture key users. How to meet consumer needs is a key point that craft beer companies need to pay attention to. Boston Beer Company successfully developed the fruit beer category, allowing it to dominate that category and capture 60% of the U.S. fruit craft beer market share. In today's consumption transformation, consumer demands are more diverse and segmented, but the pursuit of high quality is more consistent than ever. Since 2014, the total output of the domestic beer industry has experienced negative growth for the first time in over two decades, and the trend towards high-end development in the beer industry has become a consensus. Craft beer, as an emerging product, has attracted large breweries and entrepreneurs with its astonishing growth rate, but only those craft beer companies that truly cater to consumers' quality needs can genuinely win the market. Source: YIOU (ID: i-yiou) Tips will be paid 400-2000 yuan once the tip is adopted.