UK-based Brewdog said that it plans to open more bars and produce more beer in China. Through a new partnership with Budweiser China, the craft beer company will vastly expand its presence in the world’s biggest market for beer.
You can see that China’s beer consumption was way up:
The Chinese Consumer
In its 2023 report on the Chinese consumer, McKinsey cited double digit growth of upper-middle and high-income households. Saying they continued upgrading their purchases, the report reminded us of a past econlife post. With rice our example, we saw where the Chinese middle class consumer was upgrading to better rice and rice cookers.
Now we can add craft beer. Whereas Brewdog has just one Chinese bar in Shanghai, they plan to open more in the near future. In addition, by the end of next month, they will be brewing beer locally at the Budweiser Putian craft brewery plant.
While the following graph on the Chinese consumer is from 2016, McKinsey said the trend “maintained momentum” in its 2023 report. They called it premiumization:
Our Bottom Line: China’s Beer Consumption
For a developing economy, becoming more affluent first means more meat and then maybe a washing machine. Described through a development ladder from Goldman Sachs, at each rung spending surges and then flattens at that higher level when consumers can afford to climb to the next step.
Although, Goldman Sachs Research published its spending ladder for investors during 2012, it’s handy for us too. Using 2021 World Bank data, China’s per capita income is $12,556. That would place it (and beer) somewhere between cars and dishwashers:
As for beer and per capita income, according to the American Association of Wine Economists (yes, really), we need an upside down “U” to illustrate their relationship. As individual incomes increase, so too does beer consumption. Then though, when wine and spirits become affordable, people move from beer to pricier liquor. I would suspect though that craft beer is classified as pricier liquor.
Finally though, for a bit of perspective, we can compare China’s beer drinking to other countries:
My sources and more: Thanks to the BBC’s World Business Report podcast for alerting me to China’s beer consumption. From there, I found the details in this BBC article. and a McKinsey Report on the Chinese consumer. Then, for the bigger picture, the possibilities ranged from Our World in Data to the American Association of Wine Economists.