Many may think about the differences between draught beer, draft beer and craft beer at the bars, but are too shy or reluctant to ask. Well, an answer to it is that a draft beer is a beer that flows “off the tap” as compared to bottled beers. As draught or draft beers mean the same and compared to bottled beer, the formal is being filtered and pasteurized. While craft beer is not filtered and pasteurized, leaving a little yeast and a heavy body.
Craft beer, also known as “microbrew”, is usually brewed by smaller breweries than mainstream breweries also known as “macrobrews” like Budweiser and Carlsberg. Due to their nature, craft beer is considered tastier than regular bottled beers while commanding a higher price.
Although craft beer and craft brewers are small, it is the hallmark of innovation. Craft brewers interpret historic styles with their own unique twists and develop new styles that are creative. Generally, craft beer is made with traditional ingredients like malted barley, while sometimes non-traditional ingredients are added for distinctiveness.
With increasing popularity, craft beer breweries have afoot on the capital markets of China. In 2016, Panda Brew and Master Gao have received the likings of investors. A “Beer Geek App” was also launched the same year providing a database on everything there is to search about craft beer, including bar locations, reviews and promotions. In 2017, the parent company of “Beer Geek App”, ShanghaiCraft Beer Infotech Co. obtained a Series-A funding.
Last year the mergers and acquisitions in the China’s beer industry turned active and vibrant. The industry leader Budweiser acquired Kaiba Craft Beer and Boxing Cat Brewery. Budweiser, in the span of 3 year from 2015 to 2017, acquired as many as 18 craft beer brands.
The craft beer industry is growing at a rapid rate of 40% per year, and 800 brands of craft beers are already out in the market. A substantial portion of their customers are young, post 1990’s generation, tech-savvy and adventurous. It has benefitted the whole supply chain of the F&B industry from pubs to dining outlets.
Regardless of its popularity in China, the craft beer industry is relatively nascent. Consensus agree that it was only in 2015 that the craft beer industry entered into an exponential growth stage.
Ironically, the thirst for imported craft beer among Chinese was followed by decline in demand for China’s local beer. China Securities Journal reported that, since summer of 2014, China’s local beer production went into 25 months lowest, falling from 4,921.85 kL to 4,506.40 kL. The import volume, instead, increased, between 2011 and 2016, from 64,203 kL to 646,384kL, a multiple of 10x in 6 years.
Another report from Dutch Rabobank claims that a normal Chinese person on average consumes 36L of beer a year, which is higher than world’s standards. It foresees the industry entering into a mature stage.
Within 5 years, the premium beer industry grew 160%, a market share of 4% contributes to 18% profit of the whole industry. The craft beer industry amounted to 1% market share, however, the potential is huge.
The consumer mix has changed from the early niche market to a more general public representing a difference in spending patterns, as the channels for craft beer expand, craft beer will catch-up with the mainstream beers.
In Shanghai, there are many outlets that specifically sell craft beers and are welcomed by both locals and expats.
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