China, being the world’s largest producer and consumer of beer, is projected to witness a consumption rebound in the latter part of this year. This shift is expected to lean towards premium beer offerings due to various factors including sporting events and warmer weather conditions. Analysts at CGS International anticipate a surge in beer consumption in the second half of 2024 following a decline in volumes in the first half compared to the previous year.
Sporting events such as the ongoing Euro 2024, upcoming Copa Americana, and the Paris Olympics are likely to play a significant role in driving up the demand for beer in China. Bars and stores are already capitalizing on this opportunity by decorating their premises with European Cup merchandise and offering sports-themed meals to attract customers. This trend is expected to fuel the growth of the beer market in the country.
Chinese online database QiChaCha revealed that the beer industry in China is witnessing a clear trend towards high-end offerings. Major beer brands are actively competing to launch products and services that cater to scenario-based consumption. The surge in sales of premium beer products in catering and entertainment channels is expected to propel the sector forward.
The shift towards higher-end beer offerings is anticipated to enhance margins for breweries in China. In addition, the decrease in barley prices is further aiding in driving down costs for beer production. Data from China customs agency and independent research indicate a 30% year-on-year drop in the average imported barley price from January to April. This favorable trend is expected to continue throughout 2024, benefiting the beer industry.
China is not the only country experiencing a recovery in beer consumption. Global brewers are also set to sell more beer this year after facing several quarters of declines. Companies like Heineken and Carlsberg have reported volume growth in recent quarters, indicating a positive outlook for the industry. Events like the Paris Olympics and Euro 2024 are expected to contribute to this growth, particularly in the Asian market.
CGS International analysts Lei Yang and Sun Feifei have identified Tsingtao Brewery and China Resources Beer as major beneficiaries of the anticipated rise in beer consumption in China. The duo has given the beer sector an “overweight” rating, highlighting the potential for these breweries to capitalize on the recovering market. However, they also cautioned that intensified price competition among breweries could put pressure on margins in the future.
The beer industry in China is poised for a recovery in the second half of 2024, driven by factors such as sporting events, warmer weather, and the trend towards premium offerings. Breweries are expected to benefit from this growth, with major players like Tsingtao Brewery and China Resources Beer well-positioned to capitalize on the changing market dynamics. As the global beer market continues to rebound, the outlook for the industry remains positive.
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