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Published on : May 13, 2015

A report recently released by Rabobank indicates a strong growth in the market for flavored alcoholic beverages and comparatively lesser demand for beer, in China.

The report states that the Chinese beer industry showed a decline in volumes in 2014 as compared to 2013, and the decline is a first in year-on-year volumes after 24 years of growth. In 2014 volumes have decreased by 1% to 12.6bn liters. There is a decline of 2.2% in beer production seen in the first three months of 2015. In contrast, imported beer growth continues with volumes going up to 80% and value increasing 50%.

Beer imported from Germany remains prime with about half of the imported beer market share. The main brands are Oettinger, Krombacher, Eichbaum and Würenbacher, and are sold through web portals such as JD.com, and Yihaodian. Imported beer is also sold in supermarkets and hypermarkets. Though the margins for imported beer are higher, the obstacles are limited shelf-life due to the 3 month shipping time, and a period of six months for promotion and selling the products.

The report about China’s market for beer and alcoholic beverages has details about specific drinks such as flavored alcoholic beverages (FAB), Bacardi, and smaller brands. FAB year-on-year growth rates show growth of 100% as compared to other alcoholic drink categories and set to annual compound growth of 30 to 40% over the next three years. FAB volumes have gained from 1m boxes in 2006 to 10m boxes in 2012. The sales in 2013 were about U.S. $325m in 2013.

Though smaller drinks brands are active in the market, there are newer entries in the FAB market such as baiju-based FABs and lemon, coconut, and peach flavored FABs.