Hot summer days always make people think of beer, but this alcoholic beverage closely related to people's lives has not been developing well in recent years. Public data shows that China's beer production in 2016 was 45.064 million kiloliters, and in the following years 2017-2021, the figures were 44.014 million, 38.122 million, 37.652 million, 34.111 million, and 35.624 million kiloliters respectively. Although production slightly increased in 2021 due to the pandemic, it still cannot hide the consecutive decline in beer production. At the same time, China's beer sales revenue has repeatedly hit new highs in recent years. In 2018, China's beer sales revenue was 147.45 billion yuan, in 2019 it was 158.13 billion yuan, and by 2021, this figure had grown to 179.49 billion yuan. On one hand, beer production continues to decline; on the other hand, sales revenue increases year by year. What changes in the beer industry do these seemingly contradictory trends reflect? And what opportunities do these changes bring to the hundred-billion-yuan beer market? 1 Traditional beer brands face huge market challenges in the new era! Compared with the foreign beer industry, China's beer market started relatively late. In 1900, when Russia invaded Northeast China, they brought beer to China and built the first beer factory in Harbin: Ulublevsky Brewery, which is the predecessor of Harbin Beer. Under the influence of foreign capital, Qingdao, Yantai, Guangzhou, and other cities also successively established breweries of various sizes. At that time, although there were already many breweries of different sizes across the country, the beer industry developed slowly. It was not until the 1980s that China's beer production was only about 400,000 tons, less than 1/70 of today's production. After the reform and opening up, both industrial and agricultural productivity in China greatly improved, and breweries sprang up like mushrooms, giving birth to a large number of regional beer brands, such as Beijing's Five Star Beer, Shanghai's Guangming Beer, Chongqing's Shancheng Beer, and Guangdong's Zhujiang Beer. At the same time, foreign beer brands such as Carlsberg, Heineken, Budweiser, and San Miguel also began to enter the Chinese market, officially ushering in the era of fierce competition in China's beer industry. In the 1990s, the number of beer enterprises in China exceeded 500, making the beer industry one of the most competitive industries at that time. Against this backdrop, leading beer manufacturers began to seek to enhance their influence in the industry through investment and mergers. The number of beer enterprises in China decreased from 474 in 1999 to 210 in 2012, eventually forming a market pattern dominated by five major beer groups: China Resources, Tsingtao, Carlsberg, Budweiser, and Yanjing. As the main means for beer companies to seize market share, low-price strategies have often proven effective in market competition. In an incremental market, relying on low prices to gain market share is certainly effective, but as consumers' spending power gradually increases, low prices naturally become equated with "low quality." Coupled with the near absence of new market growth, traditional beer manufacturers inevitably encounter growth bottlenecks. When in dire straits, change is necessary. Therefore, major beer manufacturers have turned to the high-end market. In May last year, China Resources launched Li (999 yuan per box of 2 bottles), with a single bottle priced at nearly 500 yuan. Similarly, Tsingtao Beer launched its high-end product "Legend of a Lifetime" at 1,399 yuan per bottle. Budweiser launched the "Master Legend" gift box at 1,588 yuan per bottle. The well-known craft beer brand Ubrew also launched a 10-time champion co-brewed master cup craft beer gift box at 688 yuan per bottle. The launch of ultra-high-end products shows the beer industry's determination to change. Although this change has driven gradual profit increases for major beer manufacturers, the dismal sales volume cannot hide the fact that beer sales are declining year by year. The decline in traditional beer sales, in my opinion, mainly stems from the following three changes: 01 Changes in population structure Beer production is mainly related to the number of working-age people (15-64 years old). Public data shows that China's working-age population began to decline in 2013. Some data indicate that the proportion of people aged 20-34 in China has dropped from 27.3% in 2000 to 21.8% in 2020. This change in population structure directly led to the decline in beer production. 02 Changes in consumer preferences Economic development and improved productivity have led to a flourishing beer industry. The emergence of craft beer, low-alcohol drinks, and fruit-flavored drinks has further met the needs of younger and female consumers, while also beginning to erode the market share of traditional industrial beer. 03 Changes in channel structure At the channel level, 90% of domestic beer companies' sales come from traditional offline catering channels. This has led beer companies to secure their positions by buying out restaurants and stores to grab market share. Now, the rise of online channels, new retail, and new consumption scenarios, coupled with the ongoing pandemic, have made the previous extensive management methods unsustainable in the new consumption environment. 2 Beer is getting more expensive, but people are drinking less Changes in population structure directly led to the year-by-year changes in China's beer production. Another factor that cannot be ignored is that consumers in the new era are no longer as enthusiastic about traditional industrial beer as before. This not only reflects the changes in productivity brought about by economic development but also more directly reflects changes in consumer preferences. According to the latest "Tmall Beer Trend White Paper" released by Tmall, high-end, craft, zero-sugar low-calorie, and scenario-based marketing have become new trends in the beer industry in recent years. 01 Quality equals high-end With rapid economic development, per capita disposable income has also increased. This has led the public to gradually shift from meeting basic living needs to improving consumption quality. Seeking quality rather than quantity has become a typical characteristic of most consumers. High-quality ingredients, high-end brewing techniques, and cultural heritage are important factors for these consumers when choosing beer brands. 02 Craft beer with diverse flavors is increasingly favored by various groups With consumption upgrading, the needs and consumption scenarios of Generation Z young people for beer have changed. Young people are no longer satisfied with monotonous beer flavors but prefer niche, personalized craft beer. Data shows that in 2021, the growth rate of craft beer with diverse flavors was much higher than the overall beer market. Better taste, quality craftsmanship, innovative flavors, and multi-scenario packaging not only provide young consumers with more beer choices but also drive the rapid development of the craft beer track. 03 Health and intelligence Sugar-free and zero-calorie beverages have become popular worldwide. In recent years, this trend has also begun to spread to the beer field. Research shows that 25% of global consumers worry that beer drinking habits may affect their health, and the emergence of non-alcoholic and low-calorie beer has to some extent resolved this contradiction. At the same time, as brewing equipment becomes more intelligent, craft beer brewing achieves precise control over the fermentation environment and conditions, ensuring product quality while also ensuring that its quality meets standards, making it healthier and safer. 04 More segmented and diverse consumption scenarios The development of the stay-at-home economy and the single economy has led to beer consumption scenarios no longer being limited to catering channels. With the segmentation of life scenarios, beer consumption scenarios have also become more diversified. 3 New opportunities in the new era Declining sales year by year, the unstoppable trend of high-endization, and the prevalence of personalized and healthy consumption have become consensus in the beer industry. Against this industry backdrop, what opportunities are hidden for traditional distributors and retail enterprises? Undoubtedly, consumers' enthusiasm for beer will not disappear, but their consumption preferences and scenarios are changing. Only by catering to changes and actively adapting to them can one seize the initiative in the future market landscape. Although it has only been in the Chinese market for a little over ten years, it is estimated that by 2025, China's craft beer consumption will reach 2.5 billion liters. The rapid growth of the industry reflects the broad future development space of craft beer. Especially as consumers increasingly pursue quality life and personalized consumption, craft beer is undoubtedly in a vast blue ocean market. Take the craft beer brand Ubrew as an example. Although it was only established in 2013, within less than 10 years, Ubrew has developed into a leading enterprise in China's craft beer field. Ubrew craft beer bars have spread to 800 cities and districts across the country, with the number of stores exceeding 2,000. Recently, in response to young consumers' demands for personalization, scenario-based, and healthy consumption, Ubrew officially launched the Ubrew Xiaojintong intelligent beer dispensing device. Xiaojintong integrates cooling and pressurization, can provide different flavors of craft beer, and is more convenient and aesthetically pleasing to maintain than traditional beer dispensing machines, and is also better for preserving freshness and storage. In addition, Xiaojintong occupies less than 0.15 square meters and can be placed in restaurants, pastry shops, e-sports hotels, billiard halls, and even community convenience stores. By maximizing proximity to consumers, it maximizes the satisfaction of consumers' scenario-based consumption needs, allowing consumers to enjoy freshly drawn craft beer anytime, anywhere. It is worth mentioning that currently, the only manufacturer in the industry that can provide freshly drawn beer to consumers in all time periods and scenarios is Ubrew Xiaojintong. For stores, Ubrew Xiaojintong is not only a compact and convenient beer dispensing device but also a digital intelligent marketing center system. The intelligent APP for backend operations support helps terminals with data-driven sales, allowing simple operations to complete integrated inventory management, truly empowering terminals to retain customers and safeguard their operations! It is reported that Ubrew is currently recruiting exclusive city partners for Xiaojintong across the country, and plans to deploy 100,000 terminals nationwide by 2022, with free equipment installation. For early joiners, Ubrew will also provide unprecedented market and policy support. During the economic downturn, Ubrew Xiaojintong is undoubtedly a rare market opportunity. In the post-pandemic era, consumption is further stratified. Although traditional beer giants control channels and hold most of the discourse power in distribution channels, in the face of increasingly strong demand for consumption upgrading and more segmented consumption scenarios, the craft beer market is far from saturated, which means there are still many opportunities to be explored in the craft beer market.