Belgian brews no small beer in China

Yu says his association with Belgian beer began when he was looking for ways to offset losses from selling Belgian chocolates in China.

"Chocolate sales during the summer months were particularly bad in China. My company Vandergeeten Commerce and Trade Co Ltd felt that we should try to diversify the product mixture by adding Belgian beer. There has been no looking back."

Yu, a former government employee, says that in the initial years selling Belgian beer was not that easy, because not too many people were aware of the drink. "The first bottle of Belgian beer that we sold in Beijing was to a bar in the Sanlitun area called Hidden Tree."

Although Hidden Tree has long disappeared, Yu's company has grown from strength to strength. It accounts for more than 2 million liters of the 3.5 million liters of Belgian beer imported to China every year.

"We import nearly 300 kinds of beers from Belgium," Yu says, adding that most of the products fall in the premium "craft beer" category.

According to Yu, although the niche beer market is still small, it has started to bubble with activity. "Craft beers from Belgium are priced at around 80 yuan for a 330 ml bottle, compared with just 4 yuan for domestic brands. But demand has been growing steadily from well-heeled customers," he says.

Yu says that his company has a presence in most of the major Chinese cities and will look to further expand its reach.

Overall beer market

China overtook the United States as the world's largest beer market in terms of consumption in 2003. It accounts for a quarter of all the beer drunk globally and is expected to deliver more than 40 percent of the industry's growth this decade, according to market researcher PlatoLogic.

According to market researcher Euromonitor International, beer sales in China rose 4.8 percent last year to 47.5 billion liters. The institution also predicted that by 2016 beer consumption could reach 61 billion liters. Even as the smaller Belgian beer makers are connecting with premium customers, big international brewers such as Anheuser-Busch InBev are also expanding their presence in the mass market.

The Belgian-based company sold 57.5 billion liters of beer in China in 2012 and had a 13.4 percent market share, says data provided by AB InBev China. It is also the third-largest brand in the Chinese beer market after local brands such as Anheuser-Busch InBev and Tsingtao.

ABI's brands entered China in 1984 by providing technology transfer to Zhujiang Brewery in Guangzhou. Currently it has four major brands in China - Stella Artois, Budweiser, Harbin and Sedrin.

With 40 breweries and more than 20,000 employees, the company does not have the kind of problems that plague small beer makers. Its challenges are more to do with changing tastes, sources say.

"Changing tastes is a big problem in China. Chinese people prefer mild beers, while in the West the demand is more for bitter beverages," says Michel Doukeris, zone president Asia-Pacific of AB InBev.

According to the company, beer volumes in China grew by 8.3 percent during the third quarter of 2013 and accounted for 25 percent of the global beer volumes.

However, Bloomberg News says China's annual per capita beer consumption stood at 35 liters, less than 50 percent of the level in the US. The Chinese are also not that keen on paying more for beer, unlike their peers in the US or Japan, the report said.

However, industry experts say that with the average price of beer in China just about $1.20 per liter in 2012, compared with $3.70 in the US and $8.40 in Japan, there is enough room for growth.

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