Click to read the original text for details In recent years, Craft Beer has become a trendy favorite in the beer category. Beer enthusiasts' pursuit of diversified and upgraded tastes, flavors, and scenarios has given rise to more craft beer brands springing up like mushrooms in the public eye. What is good craft beer? The standard for good taste cannot be generalized; purely handcrafted beer is difficult to industrialize... The craft beer category, representing diversity, openness, freedom, and inclusiveness, is hard to define with a rigid standard. Without a standard, the craft beer market is chaotic, with a mix of good and bad products. Therefore, many craft beer companies are also exploring ways to "break out of the circle." How to move from meeting demand to building a new ecosystem and secure an important place in the market has become a key topic. 01****Origin and Development of Craft Beer Beer has a long history in human history and is subdivided into many categories. To understand craft beer, we should first look at the overall classification of beer. By color: white beer, yellow beer, red beer, and black beer; by sterilization method: draft beer (not pasteurized, allowing a certain amount of active yeast), raw beer (not pasteurized but physically sterilized, with a short shelf life), and pasteurized beer (pasteurized, stable and easy to transport); By wort concentration: low-concentration beer (2.5-8P, alcohol content 0.8-3.2%, fruit-flavored beverages), medium-concentration beer (9-12P, alcohol content 3.5-5%, golden beer), and high-concentration beer (13-22P, alcohol content 5.5-10%, black beer); By fermentation process: Lager process (bottom fermentation, slow fermentation, low heat release (fermentation temperature below 10°C), suitable for large-scale production—industrial beer) and Ale process (top fermentation, high fermentation temperature (10-20°C), fast, difficult for mass production—craft beer); By beer style: IPA—abbreviation for "India Pale Ale," literally translated as "Indian Pale Ale," with a strong hop flavor. IPA was originally brewed in England to supply beer to British colonists in India. In recent years, influenced by IPA's worldwide popularity, new styles have emerged, such as American IPA, English IPA, IPL, etc. Additionally, the United States has designated the first Thursday of August as National IPA Day. Some classic classifications include: (1) Trappist—Trappist Monastery Beer. It was initially a recognized standard, jointly created in 1997 by eight monasteries strictly adhering to beer standards, to regulate and purify the beer industry. Currently, only 11 breweries worldwide can be called Trappist monastery beers, with the oldest six in Belgium. These breweries' beers are all brewed by monks and have low output, recognized as world-class good beers. Under this category are Trappist Single, Belgian Dubbel, Belgian Tripel, Belgian Dark Ale, etc. Trappist—Trappist Monastery Beer (2) Imperial Stout. Imperial Stout originated in England. Because the Russian imperial family loved Stout (made from roasted barley malt, with a strong burnt flavor but fine foam and smooth, mellow taste), Imperial Stout is characterized by high alcohol, high bitterness, and high color. It uses a large amount of highly roasted malt and roasted barley, resulting in a dark color, with aroma and flavor dominated by dark malt and roasted barley's burnt notes. This beer may be the heaviest in flavor among all beer categories and is the style with the most variations and derivatives in the craft beer world. Imperial Stout Craftsmanship is one of the important ways to distinguish "industrial beer" from "craft beer." Different fermentation processes directly affect the drinker's taste. The "Lager process" ferments slowly, making it easier to control brewing time and thus more suitable for large-scale production, commonly used for industrial beer. The "Ale process" is harder to control, so it is often used for craft beer production. Of course, detailing the differences between craft beer and industrial beer, we can see that although the basic ingredients for brewing are water, hops, malt, corn, etc., craft beer innovates on the basis of "water beer" with diverse flavors, such as adding tea leaves, flowers, and plants to enhance richness, and extending fermentation time with stricter temperature control. In the United States, there is also a common industry standard for craft beer, such as an annual production cap of 6 million barrels and the brewery itself must hold at least 75% ownership, to protect the unique product environment of craft beer. The following is a comparison of beer development between China and the U.S., hoping to provide a timeline reference: In the mobile internet era, the word "craft" has long emphasized the complexity of the process and the promise of taste to consumers, which is why this type of beer can command a premium. When scenarios are no longer simple preset assumptions but real-time interactions between mobile terminals and physical spaces, craft beer, which heavily relies on scenarios, is destined not to be just a product that meets market demand like industrial beer. 02****Craft Beer, Brewing Youth and New Fashion The craft beer market is estimated to be worth hundreds of billions. The increasing segmentation of commercial supply, the stable growth of middle-class purchasing power, the expansion of mobile internet, and the export of British and American culture and values have all contributed to the significant development of craft beer. From the chart above, we can see that compared to industrial beer, craft beer has seen astonishing growth and has enormous development space. Attributing to the development, we cannot ignore product quality and the culture behind craft beer. Therefore, I have summarized four major reasons for the rise of craft beer: 1) Craft beer is a product of the gradual segmentation of the beer market in the commercial era. The more developed commerce is, the more niche people's needs and corresponding market supply become; thus, supply is segmented and adapted to increasingly niche consumer demands through distinctive features. 2) Craft beer is a product of the rise of the middle class worldwide. In the 1970s, the U.S. economy and middle class took off, and the American craft beer industry also experienced significant development, with the number of craft breweries growing rapidly. 3) Craft beer is a product of the internet era, especially the mobile internet era. With the internet entering the mobile era, the rise of mobile phones and tablets made viral transmission possible, and Google searches for Craft Beer saw explosive growth. 4) Craft beer is a product of cultural export from Britain and the United States. Beer originated in Europe and was exported worldwide by Britain. Today, the concept of craft beer has emerged from the United States and is again being exported worldwide, forming a mainstream trend. Based on the above reasons, the development momentum of craft beer in China is obvious. Currently well-known brands include URBREW, Panda Brew, Taishan Original, etc. From a marketer's perspective, how should craft beer find its direction within the "circle" and how to make strategic deployments? Here we will select two major craft beer cases that have successfully "broken out of the circle" for discussion: (1) URBREW: Focusing on the New Retail Model of Craft Beer Chains URBREW mainly centers on single stores, integrating the three core advantages of products, scenarios, and services through online-offline linkage and interaction mechanisms, forming a multi-dimensional social scenario business model of "one center, two engines, three wings." URBREW Craft Beer Bar - Source: Official Website In terms of strategic positioning, its positioning for "URBREW Craft Beer Bar" is: a chain craft beer bar centered on the new retail concept, adopting scenario-based sales + dine-in + takeout/delivery methods. The business model mainly uses the CBX business model (C stands for super capacity, B for super explosion, X for infinite explosion) and the 3.0 digital ecosystem model, achieving super capacity, super explosion, and unlimited market benefits in the craft beer market through product system quantity, system profits, and brand effects, to gain future growth in the beer market. Its product structure is mainly craft beer, with side dishes as accents, vertically supplied by its own brewery; the store style highlights the colors of the craft beer series, creating a pure social drinking environment that emphasizes craft beer culture. It is understood that URBREW currently has about 300+ new stores nationwide each year. URBREW uses mini-programs and enterprise WeChat to "graft" external traffic to stores through product marketing, supply chain management, digital store transformation, intelligent customer management, and precision marketing, while "internal traffic" can order anytime, building a private domain membership ecosystem. URBREW - Growth Flywheel (2) Panda Brew: Full-Category Strategy + Multiple Distributor Distribution Panda Brew Pop-up Event - Source: Internet Unlike URBREW, Panda Brew focuses more on a direct sales model, with the manufacturer facing the terminal directly, combined with KA, catering, and online multi-channel operations, and engaging in diversified marketing models such as co-branding and pop-up events. Distributors are Panda Brew's main sales channel, with the manufacturer facing the terminal directly and collecting sales feedback and reputation in real-time to make timely adjustments and responses. The following is a summary of Panda Brew's sales channels and marketing model: Panda Brew uses a full-category strategy, personalized packaging, and the launch of specialty craft beers to capture customer mindshare. We can see it has made sufficient efforts in product features. For example, it launched a "hard seltzer" product specifically for women—Qing'er—which successfully won over a large female fan base with the trendy "0 sugar, low calorie" and "low alcohol" features; it also entered the whiskey brand; In packaging, it pays attention to detail, using the panda as a "national treasure" brand image to drive novel Chinese-style beer, which is also an eye-catching highlight. This localized business logic differs from foreign craft beer brands, allowing Panda Brew to quickly expand; In craftsmanship, it launches seasonal craft beers, such as according to the 24 solar terms, with "Youlan Oolong Pale Ale" during Guyu to suit seasonal atmosphere needs. 03****Starting from "4P+I" to Build a New Ecosystem for Craft Beer Based on the comparison between the two, we can see that both have their own specific advantages in strategic positioning, channel promotion, and management models. However, to gain a deeper understanding of craft beer development, as marketers, we not only need to consider how brands and operators can enter more reliably, and how distributors can leverage craft beer to transform from big merchants to big brands, but also trace back to the source and analyze the market from five aspects: "4P+I" = (product, price, promotion, place + innovate) Product: Deepen quality, expand the breadth and depth of the craft beer market

  1. Broaden audience breadth by launching mass-market craft beers more suited to traditional Chinese tastes, thereby pushing the craft beer category to a larger consumer market;
  2. Explore product depth by seeking breakthroughs in taste to meet the needs of professional enthusiasts; Case 1: Master Gao's "Jasmine Tea Lager" and Panda Brew's "Panda Eye - Honey Ale" are both entry-level products with higher mass acceptance; Case 2: NBeer began building China's first oak barrel aging workshop in 2015 for barrel-aged beer and promoted barrel-aged sour beer. Its 2019 Nibi Ke series sour beer won gold medals in world brewing competitions in Japan, the UK, and other countries. Price: Avoid price wars to focus on high-end positioning Although craft beer has good development momentum, the current consumer base for craft beer is still niche. It will take more time for more consumers to accept it. Consumers are very price-sensitive. When new entrants flood in, craft beer priced several times higher will inevitably face the test of price wars. But if the vicious cycle of "price wars" is brought into high-end products like craft beer, the ultimate consequence is that high-end positioning will be difficult to establish. Previously, Hou Xiaohai, CEO of China Resources Beer, also stated that the traditional price war model for beer companies is no longer viable, and high-end competition driven by product consumption upgrades will become the main trend in the next round of competition. Place: Expand incremental markets and open up diversified category tracks
  3. Dual online and offline drive: After the pandemic, online marketing is an important way for brand growth, but the alcohol industry still relies on offline channels. Focus on online audiences, do good marketing communication, and combine with offline word-of-mouth to break out and spread, with mutual linkage;
  4. Diversified innovative channel strategies: Manufacturers are beginning to try new channel strategies, showing stronger diversification. Some independent craft brewers are expanding from self-built channels to mainstream channels such as regular catering and retailers; Case 1: Panda Brew entered catering stores through partnerships with "Tai Er Sauerkraut Fish" and multiple barbecue restaurants, while Haidilao Beer (produced by URBREW) penetrated convenience store channels like "FamilyMart." Case 2: Taishan Original focuses on original beer with a shelf life of only 7 days, adopting a "direct operation + franchise" model. Since starting in 2016, it has grown to over 1,700 stores covering 28 provinces and cities. Case 3: Lehui International launched a fresh beer vending machine, planned to be placed in Chinese restaurants, mid-to-high-end hotels, commercial centers, and other offline retail terminals, highly integrated with consumption scenarios. Positioning/Promotion: Differentiation strategy, precise brand strategy, using "craft beer culture" as a guide to cultivate customer loyalty and repurchase rate
  5. Differentiated and precise positioning: Start from niche market segments, implement differentiation strategies, precisely position the brand, while consolidating influence in existing segments and continuously trying to enter new segments, steadily advancing to better control risks and achieve success.
  6. Increase customer repurchase rate: The cultural and social attributes of craft beer mean that offline channel promotion and cultural advocacy are far more important than other fast-moving consumer beverages. Case 1: Domestic craft beer brand URBREW has gathered brand fans and craft beer enthusiasts by establishing a tasting club. Every time URBREW develops a new beer flavor, it invites club members to taste and screen it. Only after gaining approval from the majority of members does it proceed with limited production. If market feedback is good, it further expands production scale. Case 2: "Master Gao" has hosted the beerock beer festival with strong rock music elements for five consecutive years, deeply binding craft beer with music culture, enhancing brand awareness, and maintaining user stickiness. Innovate: Use distinctive hops and yeast to achieve multi-flavor, diversified choices
  7. Specialty flavor innovation: The various fancy flavors of craft beer, such as bitter, straw, herbal, nutty, earthy, pine needle, etc., all come from the selection of different hops and ingredient combinations;
  8. Technological innovation: Professionally create high-quality beer, strictly controlling production, distribution, and supply; Case 1: Yunnan brand "Yiyun Brewing" combines beer with local specialty product—spirulina from Lijiang Chenghai—to brew a green "Bibo" craft product; Case 2: "Huobufan"'s two fruit pulp beers use a large amount of original fruit pulp in the brewing process, with dual fermentation by lactic acid bacteria and yeast, achieving a deep fusion of beer and fruit. Case 3: As the first product in Wallenpaupack Brewing Company's "For the Love of Lager" series, Zwickelbier demonstrates how to brew and store beer correctly and how to use technology to create complex flavors and fresh taste. 04****Final Thoughts It is worth noting that the current craft beer track is still in a state of "a hundred flowers blooming, but wild growth." Under the development boom of craft beer, there are bound to be some "growing pains" that need to be resolved. (1) Stereotypes created by industrial beer Some established beer companies, relying on their technical and channel advantages, fail to meet consumers' personalized needs when entering the craft beer market; forming fixed consumer perceptions that their products are still industrialized. In contrast, some emerging brands can more flexibly meet consumer needs. (2) Uneven craft standards Some brands use OEM processing and labeling, and some bars brew their own beer in a "front store, back factory" model, all of which lead to uneven craft control and quality standards in craft beer. (3) Fragmented craft beer landscape Currently, China's craft beer competition landscape is highly fragmented. Foreign leading manufacturers have advantages, while independent manufacturers are even more dispersed. It is expected that the craft beer industry will continue to undergo a reshuffling process, with significant room for concentration improvement. (4) Synchronization of relevant industry standards and policies In April 2019, the China Alcoholic Drinks Association issued the "Workshop Beer and Its Production Specifications," stipulating that brewing units must be production units with a beer product production license (SC). As consumers have more choices in beer, the craft beer market is bound to take off. To move from meeting "demand" to building a "new ecosystem," we need to effectively strengthen the connection between brands and consumers, end the stage of wild growth, and continuously update and iterate strategies. The road is long, but with action, we will reach the destination. We also look forward to a strong craft beer brand becoming a dark horse soon! Source: Kotler Marketing Strategy (ID: kmg1981) Author: Yu Qianqian _ -END- _