Chinese Craft Beer Development. Carl Setzer

Transcription

1 The Published Topic The published topic for my speech today was related to this article: It s a fun story that I can tell in 5 mins. For the rest of my talk I d like to discuss the development of craft beer in Greater China and East Asia. So if I can tell the weed story in less than 5 minutes can I use the remaining 55 to spread some international craft beer gospel?

2 Chinese Craft Beer Development Carl Setzer

3 About Carl Setzer Born and raised in Cleveland, Ohio Founded Great Leap Brewing in October of 2010 with Liu Fang Authoritarian Brewmaster and CEO of Great Leap Brewing Founding member of Craft Beer Association of China (CBAC) Member Technical Scientific Committee of the Berlin Institute for Fermentation and Biotechnology (VLB)

4 Great Leap Brewing Experience in Beijing

5 Original #6 Doujiao Hutong Location In 2010, we found the 100 year old Qing Dynasty official s former library that would become the home of Great Leap Brewing.

6 Great Leap Pilot Brewery In 2011 we outgrew our humble brewery in the hutongs, and established a production brewing facility in the Tian Xian Yu, nestled under the Mu Tian Yu section of the Great Wall. Nowadays it houses our barrel aging program and the Koelship program as we seek to continue to expand our creativity and brewing portfolio.

7 #12 Flagship Location-Brewpub Model Great Leap Brewing #12 was opened in June 2013 to meet the high demand for our beer and was the first Great Leap location to include a full service kitchen. The locations features a 715 square meter brewpub featuring on-site brewing facility.

8 #45 Xinyuanjie Location-Brewpub Model In March 2015, Great Leap Brewpub #45 opened for business. This brewery produces our three bestselling beers: the Honey Ma Gold, Pale Ale #6 and Banana Wheat.

9 Great Leap Brewing-Brewpub Model Annually Great Leap serves over 60 unique brands from grain to glass in our own locations and production volumes reached 4,500 HL last year, and GLB currently enjoys a customer base of 60% Chinese, 40% Expats.

10 Brewing Philosophy The goal of Great Leap Brewing is to brew a series of craft beers that represent the unique tastes of Chinese cuisine. We source the finest raw materials both domestically and internationally, and seek to incorporate high-quality teas, spices, honeys, fruits and vegetables into our beer menu.

11 Current State of Chinese Craft Beer Development

12 Beer Industry Overview in China The national production volume of beer is decreasing for the past 4 year. The volume of 2016 is 4506 (Million kiloliters)

13 Beer Industry Overview in China Shandong, Guangdong, Henan, Zhejiang, Liaoning are the top 5 provinces in terms of production volume.

14 China s Craft Beer Past China s First Craft Beer Development Beijing first saw a small brewpub economy develop in the late 1980s with a chain that had two locations in the city. Popular with college aged and young professionals Opened by a Hong Kong restauranteur Closed Abruptly after rumors of the ownership having failed business dealings in North Korea

15 China s Craft Beer Past China s German Beer Fantasy Throughout the 90s and 00s was also home to numerous Bavarian concepts of traditional German style beer in both Beijing and Shanghai. Led by Paulaner, Beijing was also home to Chinese concepts like Gold Hansen as well as other Bavarian brands that lacked the corporate infrastructure of companies like Hofbrauhaus and Paulaner, namely Drei Kronen 1308, Hopfenstube/Furst Carl and Erlinger.

16 Definition of Craft Beer USA Definition Small: Annual Production of 6 million barrels or less Independent: Less than 25% owned or controlled by alcohol industry member that is not itself a craft brewer Traditional: A brewer that has a majority of its beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation China Definition Small: Only produce and sell up to 200,000HL of beer per year. Independent: 0% of the business can have investments from other large alcoholic beverage companies. Operation: 1.Produces beer in a brewery or factory 2.Sell beer in brewpubs, restaurants, other bars, etc. 3. Must have your own personal brand and company name 4. Must be officially registered with the government, be able to issue receipts

17 Implementation Methods in China 1. Brewpub Model 2. Contract Brewing 3. Self-Owned Production Facility

18 Top 10 Chinese Craft Brewery Today GREAT LEAP BREWING MASTER GAO JING A BREWING CO, HARVEST SLOW BOAT BREWERY ANT BREW PANDA BREWERY SHANGRI-LA REBERG 18 BEERS

19 Current State of Craft Beer in China CONTRACT BREWING This is the most common model utilized by the current craft breweries in China. (9 of the top 10 Chinese craft breweries use this method. Due to regulations and legal restraints in China, many breweries all contract their beer via third party commercial breweries or contract breweries. Picture of Ürbrau Handan

20 Current State of Craft Beer in China Anheuser Busch InBev s ZX Ventures China To disrupt the Market

21 Current State of Craft Beer in China Beergeek 酒花儿 A Chinese app about craft beer also a craft beer online sales platform Partnered with contract brewing facility to produce its own craft beer Claims to receive over 30 million RMB Series A investment

22 Current State of Craft Beer in China PANDA BREWERY Commissions Production Brewery in Hunan Closes Series A Investment in 2017 Plans to expand with another brewery in Guizhou

23 Increase of foreign brands presence James Watt from Brewdog at the Beijing craft beer bar Peiping Machine Stone China Tour

24 China s Craft Beer Development Facts China s first craft brewery opened in 2008 with the founding of Boxing Cat Brewery in Shanghai. In 2010, Beijing saw its first craft brewery open Great Leap Brewing. In the last seven years, over 200 craft breweries have opened up all across China. Some have already grown quite large, but the majority still remain nano-breweries and brewpubs. The CBAC boasts a membership of over 40 craft breweries The growth of the Chinese craft beer industry has been significant, but it is too early to call it a revolution. Currently, China looks to follow the same path as America in the late 1990s. Chinese craft brewers need to get into the business for the correct reasons.

25 Future Potential Strengths China s unique culinary traditions provide access to numerous flavors, additives, and other ingredients to create a truly special style of craft beer. Growing Middle Class Stagnate Commercial Brewing Industry Opportunities China, with its population and one of the world s richest culinary and cultural histories has a huge potential to not only make great craft beer, but make and define new categories of craft beer that other countries and breweries had never even considered. Weaknesses Lack of an educated market Craft breweries owners entering the business for the wrong reasons. Regulatory loopholes and lack of infrastructure Threats The Chinese craft beer industry itself Social Media/KOLs Poor product quality at both the contract brewing level and the brewpub level create a lag between the consumer expectation and the consumer experience.

26 Will China have a bigger premium/ultra premium/craft market than America? No religious stigma No cultural inhibitions to drunkenness YES! Historical connection between business and alcohol Rising middle class Connection to local

27 What s the next steps? Clearer Reforms to Regulatory Deficiencies Continued Education of Both Consumers and Industry Clearer Definitions of What Is and What Isn t Craft Beer in China Exposure and Collaboration with International Craft Beer Brands Attendance and Participation in International Conferences and Technological Discussions

28 QUESTIONS