(Yicai Global) July 18 -- China’s beer sector saw strong sales in the first six months, despite an overall dip in sales of alcohol, as the rise in popularity of craft beers, which are made in the traditional way and boast stronger flavors than mass-produced ales, drives growth.

Beer sales rebounded in the six months ended June 30, largely thanks to a recovery in the catering industry and due to summer arriving earlier than usual, according to lager distributors and retailers based in Beijing and eastern Shandong province.

Beer does not seem to be affected by the economic cycle, lager expert Fang Gang told Yicai Global. So though sales of alcohol stayed weak in the first half, that of beer were not significantly affected.

China produced 15.1 million kiloliters of beer in the first five months, a jump of 8.4 percent year on year, according to the National Bureau of Statistics. A quarter of this was produced in May, a year-on-year gain of 7 percent.

And a fall in the cost of raw materials is also helping. The price of imported barley plunged 12.1 percent at the end of May from the start of the year to USD359.80 per ton. The price of packaging materials, such as glass and aluminum, has also come down.

The favorable circumstances were reflected in the performance of industry leaders. Yanjing Beer said it expects net profit to surge by between 45 percent and 55 percent in the first six months from the same period last year to between CNY508 million (USD70.8 million) and CNY543 million.

While Zhujiang Beer is anticipating a between 10 percent and 20 percent jump in net profit to between CNY345 million (USD48 million) and CNY377 million. The Guangzhou, southern Guangdong province-based brewery shifted 689,000 metric tons of ale over the period, an increase of 7.5 percent from a year ago.

Rise of Small Breweries

Craft beer sales are starting to boom, especially as more affordable and beginner-friendly varieties come on the market, Wang Long, founder of craft beer brand Jing Doll, told Yicai Global.

Craft beer is one of the few types of beverages to experience rapid growth this year, said Li Qing, chairman of Urbrew Craft Beer, which runs more than 2,000 stores in the country.

China’s craft beer market was worth CNY20 billion (USD2.8 billion) last year, Li said. Between 300,000 and 500,000 kiloliters were sold at a market penetration rate of 10 percent.

Some 5,213 craft beer companies have been set up since 2020, of which just under a quarter at 1,207 were registered in the first half, according to business information platform Qcc.

Big lager manufacturers are keen to enter this high-end market, and to not be outdone by smaller competitors. In recent years, Budweiser Asia Pacific, Tsingtao Beer, Chongqing Beer and Yanjing Beer have either acquired craft beer brands or established their own craft beer production bases.

Tie-ups with beer giants can lower production costs for craft beer brewers, expand their sales channels as well raise brand awareness, craft beer entrepreneur Bei Bei told Yicai Global.

Editor: Kim Taylor