China, being the world’s largest producer and consumer of beer, is anticipated to witness a consumption recovery in the latter half of this year. CGS International has projected a boost in beer consumption in the second half of the year, favoring premium offerings, particularly due to sporting events. The decline in beer volumes experienced in the first half as compared to 2023 is expected to be offset by events like Euro 2024, Copa Americana, and the Paris Olympics, along with warmer weather.
Analysts Lei Yang and Sun Feifei from CGS International highlighted the influence of sporting events on the beer market in China. They emphasized the higher-than-expected sales of premium beer products in catering and entertainment channels, leading to a positive outlook for the sector. The ongoing Euro 2024 has prompted bars and stores to create a sports-themed ambiance, thereby driving demand for beer. The ‘beer economy’ has been ignited by the European Cup, propelling the trend towards high-end beer offerings.
The trend favoring higher-end beer varieties is poised to enhance profit margins for breweries, complemented by the decrease in barley prices. Data from China Customs Agency and industry research reveal a 30% decline in the average imported barley price from January to April, reaching US$273 per ton. This favorable pricing trend is anticipated to continue throughout 2024. Moreover, the product mix upgrade, along with lower barley and packaging material costs, is expected to benefit China’s beer industry further.
Global Beer Industry Outlook
The recovery in the beer market is not limited to China alone. A Reuters report in May highlighted that global brewers are expected to witness increased beer sales this year following a period of declines. Major players like Heineken and Carlsberg reported growth in quarterly volumes after facing a downward trend in previous quarters. Events such as the Paris Olympics and Euro 2024 are expected to boost sales, particularly in Asia.
Major Beneficiaries in China’s Beer Market
CGS analysts Lei and Sun have identified Tsingtao Brewery and China Resources Beer as key beneficiaries of the anticipated rise in beer consumption in China. They have provided the beer sector with an “overweight” rating. However, the duo cautioned about intensified price competition among breweries, which may exert pressure on margins despite the positive growth outlook.
The beer market in China is expected to experience a recovery in the latter part of 2024, driven by sporting events, warmer weather, and the trend towards premium beer offerings. While the industry shows promise for growth and profitability, challenges like price competition among breweries need to be navigated effectively to capitalize on the anticipated upturn in consumption.
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