Article | Yunjiu Team (ID:YJTT2016) During the peak sales season, imported beer has been repeatedly hit by negative news. Is imported beer still a good business? At a time when it should be 'hot', it encounters 'June snow'. Recently, a 2016 media report about pesticide residue glyphosate detected in 14 German beers has resurfaced, and a video showing unscrupulous vendors 'filling beer by hand' has gone viral on social media, implicating Budweiser... As the peak beer sales season approaches, imported beer seems to be falling into the predicament that imported wine once experienced: on one hand, importers and distributors have to accept the new reality that the 'halo' of imported beer is fading, and it no longer seems so trendy; on the other hand, negative exposures about imported beer are increasing. 1 Peak Season, Imported Beer Hit by Negative News The two rumors above directly target imported beer. In 2016, media reported that a laboratory test report published by the Munich Environmental Institute in Germany showed that 14 of the most popular German beers contained varying levels of glyphosate, a pesticide residue. Glyphosate is considered 'possibly carcinogenic to humans', which attracted widespread media attention, and some media outlets listed the brands involved. The pesticide residue incident eventually ended with a statement from the German Federal Institute for Risk Assessment (BfR), which said that the glyphosate levels in these beers do not pose a health risk to consumers. 'An adult would need to drink 1,000 liters of beer per year to ingest a harmful amount of glyphosate.' Shortly after, a well-known international beer brand was again implicated. Recently, a video showing 'workers filling beer by hand from recycled cans' went viral online. The video showed a workshop suspected of producing counterfeit Budweiser, with workers using red Budweiser cans. Subsequently, self-media accounts reposted it with titles like 'Counterfeit! Do you still dare to drink this XX beer?' After the video quickly spread, Budweiser reported that 'upon discovering a suspected counterfeit Budweiser production site, we immediately reported it to the public security authorities'. The Beer Branch of the China Alcoholic Drinks Industry Association also issued a special statement to clarify. Workers operating machines bare-chested in a partner's bottling facility Both rumors emerged just before the peak beer sales season. Although they were isolated incidents, they had a negative impact on imported beer brands. Regarding the second rumor, the Beer Branch of the China Alcoholic Drinks Industry Association pointed out in its statement that 'the rumor spread widely, causing extremely bad social impact, seriously defaming the image of China's beer brands and the credibility of related enterprises, and to some extent disrupting market order'. 2 Is Imported Beer Still a 'Good Business'? For importers and distributors, imported beer was once a good business, but the boom seems to be partially fading. Imported beer is becoming less trendy and is plagued by negative news. Since 2012, the imported beer industry has entered a period of rapid growth. Seeing the huge market prospects, more and more operators have entered the field. However, behind the rapid market growth is unprecedented competition: after several years of high growth, consumers' freshness towards imported beer is fading. Currently, consumers can easily buy imported beer from various channels, and with price reductions and promotions, the price gap between imported and domestic beer is narrowing rapidly. For most consumers, imported beer has become a 'regular' on the dining table. An article titled 'German Beer 'Invades' Rural Areas' around the Spring Festival is a microcosm of this situation. While competition is unprecedentedly fierce, imported beer has also begun to see a 'mixed bag' situation, which to some extent has impacted the market and affected consumer confidence in imported beer, which was once attractive for its 'high quality'. The aforementioned German beer pesticide residue rumor exaggerated the impact of pesticide residues, but quality issues in the imported beer sector seem not uncommon. In 2015, the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) released information on substandard imported alcoholic beverages in December 2015, revealing that 110.98 tons of imported beer and wine were destroyed or returned. In random inspections, 5 batches of imported beer were found substandard, with 24.33 tons destroyed and 39.53 tons returned. In 2016, inspection and quarantine authorities in Qingdao, Hangzhou, Xiamen, and other places reported cases of returning or destroying substandard imported beer. However, the intense competition among specific companies and in the market does not hinder the rapid growth of the overall market. For most people, imported beer still seems to be a 'good business'. According to statistics, in the first quarter of 2017, China imported 117,826 kiloliters of beer, a year-on-year increase of 17.9%, with a value of 857.04 million yuan, up 18.1% year-on-year. The growth rate was higher than that of domestic beer, maintaining strong growth momentum. 3 Imported Beer's Solution: The 'Imported Wine Prescription' History is strikingly similar: as 'imported goods', the difficulties encountered by imported beer seem to have corresponding symptoms in the imported wine industry—imported beer, which has taken nearly 5 years to cover the 30-year journey of imported wine since reform and opening up, urgently needs a solution. Looking back at the growth of imported wine, it was not smooth. During World War II, imported wine began to enter the domestic market, mainly appearing in high-end venues, and the consumers were 'the rich and powerful'. After reform and opening up, imported wine gradually moved towards the masses. Until the explosive development after joining the WTO, imported wine has become an indispensable part of consumers' dining tables. Consumers' attitude towards imported wine has shifted from novelty to belonging. Similar to imported beer, imported wine development also frequently encountered 'quality crises', such as bottling on the high seas, '18-yuan Lafite', and domestic wine pretending to be imported, which repeatedly impacted consumer confidence. However, the imported wine industry continued to develop despite various setbacks. According to China Customs data, in 2016, China imported 482 million liters of bottled wine, a year-on-year increase of 21.98%, with an import value of 2.2 billion US dollars, up 17.20% year-on-year. Although the growth rate slowed compared to 2015, it still maintained high growth. So how did imported wine solve the problem? In addition to the market's 'invisible hand' for survival of the fittest, a major aspect was market education and regulation. On one hand, market promotion and consumer education by major wine-exporting countries and regions, importers, and various training institutions have engraved well-known wine regions and brands into consumers' minds. Region and grape variety have become factors in consumers' wine selection. At the same time, the embarrassment of 'mixing wine with Sprite' has given way to rational consumption, and more and more consumers have acquired knowledge of wine identification, selection, serving, and tasting. On the other hand, high-quality large distributors and wine chain enterprises such as C&D, Castel, ASC, and Fulong have risen rapidly in the market tide, setting examples and thresholds for the industry through their scale and standardized operations. Through wine culture education and market promotion, they have further promoted consumer cultivation and consumption upgrading in specific markets. In contrast, imported beer's current high growth is more of a natural market growth at an early stage, behind which market difficulties are evident, especially the 'blank slate' of consumer education and market cultivation. In this regard, imported wine indeed provides highly referential experience. For the imported beer industry, imported wine has witnessed the changes in consumer attitudes over 30 years of reform and opening up. Now, facing a rapidly growing market, imported beer is still a 'good business' worth investing in. Who will take the lead in imported beer? What do you think? Leave a comment below! -END-