Premium beer appeals to Chinese

11 December 2013
BEIJING: Many international brewers are looking to extend their range of premium beer brands in China amid signs that consumers in the world's largest beer market by consumption are prepared to upgrade.

As reported by the China Economic Review, leading international brands regard premium labels and investment in local breweries as the best means to overcome traditionally thin profit margins in the country.

The average price of beer in China was just $1.20 per litre in 2012 compared to $3.70 in the US and $8.40 in Japan, yet the premium beer segment is growing 2.5 times faster than the overall beer market, according to Belgian giant AB InBev.

It has launched its premium Bud Light Platinum and Quilmes Night with the aim of appealing to party-goers while Carlsberg, its Danish rival, has been promoting Carlsberg Chill and Carlsberg Light specifically for the Chinese market.

Carlsberg last week also took a controlling 60% stake in rival brewer Chongqing Brewery and, if it buys Chongqing's remaining breweries, it would gain full control of the Shancheng Beer brand.

Meanwhile, London-listed SABMiller, which is the leading international brand in China with 21.7% of the market, is pushing its Snow brand after splitting it into five price segments and three formats.

"I think premiumisation is a key, as well as innovation, particularly targeting niche high-spending consumer groups, such as more trendy beers for tier-one hipsters," said Matthew Crabbe, director of China research at Mintel.

While there are signs that Chinese consumers are increasingly responsive to premium labels and that the overall market is becoming less fragmented, analysts advised brands to be careful about how they brand their premium offerings.

Brands, they said, should not assume Chinese consumers will switch simply because a brand is foreign and brewers will need to do more than just repackage.

For example, Crabbe observed, US brand Pabst Blue Ribbon is currently being marketed as a premium beer in China but is considered in the US to be more downmarket.

Data sourced from China Economic Review; additional content by Warc staff
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