Click to read the original text for details As an upgrade of traditional beer, craft beer is in a stage of wild growth. Among many players, giants like Meituan and Hema have entered the market, which is most likely to solve the industry's small, scattered, and chaotic characteristics, or become cross-border winners. Hema has arrived, Meituan has also arrived, and craft beer continues to be fiercely competitive. Craft beer aims to replace traditional industrial beer with higher-quality ingredients and handcrafted fine brewing. Previously, domestic beer giants cultivated market consumption habits through cheap industrial beer, but this also gave rise to the willingness of the new generation of consumers to pay for high-quality beer. Compared with the heavy investment in industrial beer, the craft beer track, which emphasizes the concept of handcrafting, lowers the capital entry threshold. A large number of workshop and store players have swarmed in, which has popularized the track but also left the entire industry in a state of small, scattered, and chaotic disorderly competition. As a battleground for the "premiumization" of beer, craft beer has also attracted competition from multiple capital sources, including beverage giant Genki Forest, as well as cross-border moves by giants like Meituan and Hema. Facing the aggressive moves of many competitors, who will ultimately win in craft beer? 1
Craft beer welcomes giant players
Summer is the peak sales season for beer. This summer, drinking craft beer is becoming a trend among young people. Hema's craft beer sales increased by 369% year-on-year in May this year; Meituan Maicai also launched its own brand of craft beer. Traditional beer forces such as Budweiser, Carlsberg, and Tsingtao have also begun to aggressively enter the craft beer industry... The concept of craft beer originated in the United States. In the 1970s, the US began to popularize the use of higher-quality ingredients for handcrafted fine brewing to replace traditional industrial beer. China's craft beer industry has experienced three rounds of rapid development since its inception. Around 2008, the first batch of domestic craft beer brands represented by Master Gao and Harvest Craft emerged, but this round mainly focused on marketing to young beer-loving circles and did not have a significant impact on the industry. From 2015 to 2017, capital financed brands such as Panda Craft and Zebra Craft. Under the financing boom, craft beer was once hot, but the niche consumer group did not achieve the performance returns expected by capital, and gradually returned to calm. During the pandemic, domestic craft beer ushered in a third wave of rapid development. "This round of development of craft beer is similar to the 'lipstick effect'," said an industry insider. Affected by the pandemic and economic downturn, some young people hope to seek low-cost refined lifestyles, and craft beer exactly meets this demand. Even during the pandemic, the craft beer field still received capital favor and increased investment. According to industry statistics, in the first three quarters of 2021 alone, nine craft beer brands received financing of over one billion yuan. Among them, Challenger Capital under Tang Binsen, founder of Genki Forest, invested in both Panda Craft and Zebra Craft. And well-known cultural scholar Liu Shenglei also invested in the craft beer brand "Song Ren Dan" in his personal capacity. In addition, Tao Shiquan, chairman of Jiangxiaobai, also served as an independent director of Ubrew (China) Craft Beer Co., Ltd. in 2021, which also led to market speculation about whether Jiangxiaobai would join the craft beer industry. The successive entry of giants is changing the ecology of the craft beer industry. Previously, craft beer showed the characteristics of being small, scattered, and chaotic. Unlike industrial beer, which pursues scale and standardization, craft beer has a short shelf life and prominent personalized flavors. Most craft beer grows quietly in bars, night markets, and other scenes in the form of draft beer. "There are categories but no brands" has become the most prominent pain point in the industry. "To solve the above pain points, it is necessary to solve the high turnover of products and the heavy R&D of product flavors." Ms. Zhao, an industry insider, told Jiu Zhouzhi that the market share of craft beer in China is less than 3%, and industrial beer is still the mainstream. But with the entry of major giants, empowerment in capital, brand, and other aspects not only expands craft beer but also gradually integrates the craft beer market. 2 The industry is mixed, and giants are making a dimensionality reduction attack The rise of craft beer originated from the circle communication of young people who love beer, but the entry of giants first affects these pioneers and "pathfinders". Ahao (pseudonym), 26, is the owner of a craft beer store in Zhengzhou. He told Jiu Zhouzhi that after graduating, he followed a teacher to learn the craft of craft beer, and after completing his apprenticeship, he raised money to open this store. In a store of less than 40 square meters, four stainless steel tanks nearly 2 meters high are all the "family assets", and on one wall hangs price tags for various flavors of craft beer. In less than half an hour, five or six transactions were concluded. Seeing a first-time customer, Ahao would first pour a cup for the guest to taste. "These four flavors were all made after I debugged them for a long time, and I am quite satisfied with them." Ahao smiled and told Jiu Zhouzhi that making craft beer requires some feelings, and it is a track where it is impossible to make quick money. Most of his customers are old customers accumulated over two years. Compared with bottled industrial beer, he believes that the biggest feature of craft beer is that it uses sufficient ingredients, has a stronger taste, and is not easy to bloat when drinking too much. He admitted that industrially produced beer considers more how to store for a long time and reduce costs as much as possible, and seize the market through price wars. The product advantages of craft beer are precisely its disadvantages in market sales - a short shelf life means the need for high turnover and limits production scale; high costs mean the need for brand premium to support market prices. But these are all weaknesses of workshop-style craft beer stores. According to Tianyancha, there are about 5,500 craft beer enterprises in existence (operating, opened, and in business), of which nearly 90% were established within 5 years, and most registered capital does not exceed 5 million yuan. Entrepreneurs like Ahao are still the main promoters of the industry, and the consumer market's enthusiasm for craft beer has further led to the "wild growth" of the entire craft beer market. Within less than 500 meters of Ahao's store, there are 2 craft beer stores, one of which also sells white wine and yellow wine; the other is a mom-and-pop supermarket, which only has a half-person-high stainless steel tank in the store. When asked what craft beer is, the store owner could not explain clearly, only emphasizing: "It is just better than ordinary beer." A market supervision staff member told Jiu Zhouzhi that there is no standard for supervision of craft beer stores, and they are supervised according to general business licenses. Food safety supervision is also being gradually explored. Ahao is also aware of the current entry of giants into craft beer and is helpless. "The sales radius of craft beer stores is larger than that of canned beer, but they still need to rely on delivery platforms such as Meituan for delivery and traffic." Ahao also optimistically believes that the personalized R&D of craft beer flavors has commercial barriers, and with the accumulation of old customers, supporting a small store will not be a big problem in the short term. 3 Four types of players compete for the top track It is not difficult to see that the current craft beer market has transformed from a circle business of beer lovers to a consumer category operated commercially and with branding. And from wild growth to returning to industry rationality is the inevitable development trajectory of every consumer category. "Craft beer, as an imported product, also has foreign markets as a benchmark." Ms. Zhao, who is engaged in the craft beer industry, told Jiu Zhouzhi that in the US market, craft beer accounts for about 13.6% of beer industry consumption and 25% of sales, and is an important part of the "premiumization" of the beer market. Ms. Zhao believes that two industry signs indicate that the windfall for craft beer has arrived: First, the domestic industrial beer pattern is stable, and total sales growth has almost stagnated, which means that beer giants urgently need to find new increments, and craft beer is becoming the target of giants; Second, premiumization has become the consensus of beer giants. Whether it is Tsingtao Beer or China Resources Beer, they have launched "sky-high beer". Although the symbolic significance is greater than actual sales, it also reflects the market's desire for high-quality beer. Industry insiders analyzed to Jiu Zhouzhi that there are currently four main types of players entering the craft beer track. The first type is entrepreneurs who like craft beer; they are the enlighteners of craft beer. At present, craft beer brands such as Panda Craft and Great Leap Brewing have taken root in the market. The second type is restaurant chain stores. Catering chain brands such as Haidilao and Banu have laid out craft beer products in their stores. Recently, Banu has added a small bistro format to its new stores in Beijing, Wuhan, Hefei, and other places. The third type is platform cross-border players. Giants such as Meituan and Hema have joined the craft beer field. Their huge customer traffic and fast delivery mechanisms make them powerful cross-border players. The fourth type is traditional beer forces. Big brands such as Budweiser, Carlsberg, and Tsingtao have aggressively entered craft beer, making competition rapidly white-hot. By comparison, it is not difficult to find that the first type of interest-driven craft beer entrepreneurs have advantages in personalization and circle characteristics, but the lack of brand momentum and technical barriers has become their "hard injury". Some companies with brand awareness have begun to grow rapidly through capital connections; The second type of catering players have the advantage of having immediate drinking consumption scenarios, but as an auxiliary category for restaurants, it is difficult to grow bigger and stronger. 4 **Cross-border giants VS traditional beer giants **are running into the "final circle" Traditional beer forces and platform cross-border players are most likely to produce players who run into the top track. For platform players, huge traffic entrances, R&D capabilities, and strict selection and bargaining power have become their "trump cards". Hema told Jiu Zhouzhi that Hema's craft beer sales have accounted for nearly 50% of Hema's beer category, with a year-on-year increase of 369% in May 2022. "Hema's craft beer is not OEM; the flavors are developed by the Hema team and processed by third parties." Hema said that with the support of Hema's huge traffic, the high turnover of short-shelf-life products is no longer a problem, and the main need is to invest heavily in product flavor R&D. For example, Hema initially planned to launch a limited white peach flavor for the Spring Festival, but market research found that white peach flavor was too common. After multiple rounds of communication, it was changed to bayberry flavor. Facing the conflict that bayberry fruit itself has a not prominent taste and beer is a product with a strong flavor, Hema finally launched this hit product after several twists and turns through the R&D of NFC bayberry juice from the main production area. In Hema's view, after solving the problem of high product turnover, the overall price of Hema's craft beer will be about 50%-60% cheaper than similar products in bars. Like Hema, Meituan's "dual blessing" of brand and traffic, as well as the convenience of food delivery, has also led Meituan Maicai to launch its own brand of craft beer. Jiu Zhouzhi learned from Meituan that Meituan Maicai's craft original pulp German wheat white beer entered the TOP5 single product in the platform's beer category within less than a month of its launch. At present, most users' impression of craft beer is still stuck on high prices. Meituan Maicai is helping affordable craft beer gradually become accepted by consumers through measures such as improving the supply chain, promoting self-developed products, and reducing circulation links. Different from the business logic of platforms, traditional beer forces are still pursuing the "if you can't beat them, acquire them" routine. Carlsberg "merged" and invested in Jing-A Brewing, and Budweiser acquired Boxing Cat and Goose Island. In addition, Tsingtao Beer and Zhujiang Beer have also successively launched IPA, Pilsner, and other craft beer brands. "For traditional beer companies, they know the industry better, but they are unlikely to personally enter the niche craft beer market." Ms. Zhao said that some high-end beer products launched by major manufacturers are "cashing in" on the concept of craft beer, not real craft beer. Giants are trying to find the greatest common divisor between scaled industrial beer and personalized craft beer. It is foreseeable that platforms and traditional beer companies with capital, brand, and industry advantages are coveting the market share of craft beer, and the entire industry ecology is also facing a life-and-death change after the entry of giants. However, the craft beer industry, which still focuses on circle marketing, needs to keep its flavors in sync with the preferences of young people and cater to consumers through rapid product iteration. This means that the outcome cannot be predicted, and everyone is a dark horse. Of course, no matter how the craft beer industry changes, maintaining its own sense of "refinement" is the biggest trump card of craft beer. Source: Jiu Zhouzhi (ID: jiuzhouzhi69) Author: Chen Pei