China’s beer market faces headwind

China’s beer consumption has been dropping for the past two years and is set to continue the downward trend for the next five years, according to BMI Research.

The drop seen from the world’s biggest beer market is a result of intense competition among brands, consumers’ changing tastes and growing health awareness coupled with a slower economy, Bloomberg reported. These factors have squeezed out lower-income beer drinkers, it added.

Domestic beer brands selling lower-priced beer suffered the strongest hit from the drop. Beijing Yanjing Beer and Tsingtao beer both reported losses in sales and profits in the third quarter of 2016 fiscal year.

The tepid performance from Tsingtao, which occupies about 15% of China’s beer market, prompted Asahi Beer to sell off its stakes in the Yantai-based brewery after first buying its stocks eight years ago. 

In the meantime, China’s beer imports have grown notably in recent years. Led by Germany, the Netherlands and Spain, China’s imported beer jumped by 15.8% year-on-year in value to US$670 million in 2016, equivalent to 650 million litres of beer in volume, based on data released by China Association for Imports and Exports for Wine & Spirits.