China, as the world’s largest producer and consumer of beer, is expected to witness a significant consumption recovery in the second half of this year. This recovery is anticipated to be fueled by a preference for premium beer offerings, particularly due to the influence of sporting events. Analysts at CGS International have predicted a rebound in beer consumption in the latter part of the year following a decrease in volumes during the first half of the year compared to 2023. Major sporting events such as Euro 2024, Copa Americana, and the upcoming Paris Olympics, combined with warmer weather conditions, are projected to boost the demand for beer in the country.
According to a report released by Chinese online database QiChaCha, there has been a noticeable surge in the sales of premium beer products in the catering and entertainment sectors. The Euro 2024 has played a significant role in this growth, with bars and stores adorning themselves with European Cup merchandise and promoting sports-themed meals to attract consumers. The “beer economy” has been set on fire by events like these, leading to a clear trend towards high-end offerings in China’s beer industry.
The trend favoring upscale beer products is expected to enhance profit margins for breweries, in addition to the decrease in barley prices that is driving production costs down. The analysts, Lei Yang and Sun Feifei, have pointed to data from China’s customs agency and their independent research, showing a 30% year-on-year drop in the average imported barley price from January to April. They anticipate this trend to persist throughout 2024, benefitting the beer industry in China and facilitating a product mix upgrade.
China is not the only country experiencing a recovery in the beer industry. Global brewers, including leading brands like Heineken and Carlsberg, are expected to witness an increase in beer sales this year following a period of decline. Heineken reported its first quarterly volume growth in over a year in the first quarter of 2024, while Carlsberg also saw an uptick in volumes during the same period. Both companies are optimistic about the future, citing events like the Paris Olympics and Euro 2024 as potential catalysts for growth.
Analysts Lei Yang and Sun Feifei have identified Tsingtao Brewery and China Resources Beer as key beneficiaries of the anticipated rise in beer consumption in China. These two Chinese beer breweries have been given an “overweight” rating by the analysts. However, they caution that intensified price competition among breweries may put pressure on profit margins, despite the overall positive outlook for the industry.
The beer industry in China is poised for a rebound in the second half of the year, fueled by an increasing demand for premium beer offerings. The influence of major sporting events, coupled with favorable market conditions such as lower barley prices, is expected to drive growth in the industry and benefit key players in the market. As consumer preferences shift towards higher-end products, breweries will need to innovate and adapt to capitalize on the emerging trends in the beer market.
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