China, known as the world’s largest producer and consumer of beer, is expected to witness a significant recovery in beer consumption in the second half of this year. This recovery is anticipated to favor premium offerings due to various factors such as sporting events and warmer weather.
The ongoing Euro 2024, upcoming Copa Americana, and Paris Olympics are expected to play a crucial role in driving up the demand for beer in China. Analysts Lei Yang and Sun Feifei from CGS International have highlighted in a recent report that these sporting events are likely to lead to higher sales of premium beer products, particularly in the catering and entertainment channels. The Euro 2024 has already sparked excitement among consumers, as bars and stores have decorated their premises with European Cup merchandise and are offering sports-themed meals to capitalize on the frenzy.
In recent years, the beer market in China has been showing a clear growth trend, with major beer brands competing to launch products and services tailored to meet the demands of scenario-based consumption. According to Chinese online database QiChaCha, beer-related enterprises in China increased by more than 7,000 last year alone. This growth has been fueled by a shift towards high-end beer offerings, indicating a preference for quality over quantity among consumers.
The trend favoring higher-end beer products is expected to boost margins for breweries in China. This growth is further supported by the decrease in barley prices, which have lowered production costs for beer manufacturers. Data from China customs agency and independent research conducted by Lei and Sun indicate a 30% year-on-year drop in the average imported barley price from January to April, reaching US$273 per ton. The analysts predict that this trend will continue throughout the year, benefiting the beer industry as a whole.
China is not the only country experiencing a recovery in beer consumption. Global brewers, including industry giants like Heineken and Carlsberg, are expected to sell more beer this year after facing several quarters of declines. Heineken reported its first quarterly volume growth in over a year during the first quarter of 2024, while Carlsberg also saw higher volumes in the same period. The positive outlook for the beer industry is attributed to upcoming events like the Paris Olympics and Euro 2024, which are anticipated to boost sales in the global market.
Lei and Sun have identified Tsingtao Brewery and China Resources Beer as major beneficiaries of the expected rise in beer consumption in China. They have given the beer sector an “overweight” rating, indicating a positive outlook for these companies. However, the analysts have also warned about intensified price competition among breweries, which could put pressure on profit margins in the long run.
China’s beer market is poised for growth in the latter part of this year, driven by factors such as sporting events, consumer preferences for premium offerings, and favorable market conditions. The rise in premium beer consumption reflects a shift towards quality products in the industry, signaling a positive trend for beer manufacturers in China.
Leave a Reply