Belgian brews no small beer in China

Val-Dieu, one of the abbey breweries in Belgium, was the location for a dinner at the international Brussels Beer Challenge 2013. [Photo / China Daily]

Rising demand for rare ales from Chinese people cheers European breweries

Beer lovers from China and other emerging markets are frothing up sales for Belgian brewers, with shipments from Antwerp to Chinese ports witnessing a steady growth.

Although Belgium makes some of the finest beers in the world, sales across most of Europe have remained lukewarm in the past few years because of the continuing financial crisis. Sales, however, from Belgium to China, which started more as a test-marketing venture, have instead blossomed into a big business.

By 2012, the size of the beer market in China had grown to more than 47.5 billion liters, making it the largest beer-drinking market in the world. Now, more Chinese have started developing a taste for the small-scale craft beers and Trappist ales, made by monks, from Belgium.

Nothing sums up the business potential of premium boutique ales more than the sight of Mercedes Wong sifting through huge stacks of bills and other paperwork in her office in Waterloo, near Brussels, even as she keeps dialing the same number repeatedly from different mobile phones.

Wong is one of the Chinese specialists based in Belgium who collects and ships Belgian beers to China. Her mission this time around is even more daunting because she has been tasked with procuring a shipment of the rare Westvelren beer.

Westvleteren is one of the most difficult beers to procure because monks from the Trappist Abbey of Saint Sixtus, in Westvleteren, control its production and sales. Since only limited quantities of the top-quality beverage are made, it commands a huge premium in global markets, Wong says.

"Advance reservation is required and you can use your phone number to pick up or reserve just one case of beer every 60 days. That makes it difficult for collectors like me," she says, adding:"Patience is not enough. You also need luck, as the monastery says on its website."

Thomas Costenoble, general manager and organizer of Brussels Beer Challenge, says: "There are only nine Trappist beer monasteries in the world and of these six are in Belgium, two in the Netherlands and one in Austria."

Belgian beers from the Trappist breweries are Achel, Chimay, Orval, Rochefort, Westmalle and Westvleteren. It is these brands that are now in great demand with high-end Chinese customers, Costenoble says.

Demand for smaller Belgian craft beers is also rising steadily. In most cases, production is not enough to cater for demand, he says.

Michael Pelsser, the managing director and owner of Val-Dieu, another well-known abbey beer from Belgium, says his brewery is already enjoying a good year in China. "We entered the Chinese market in 2013. Although it is still early to gauge the exact growth potential, sales have been growing steadily, especially from five-star hotels in Beijing and Shanghai."

Val-Dieu Abbey was founded in 1216 by a group of Cistercian monks but, after the monastery closed, the present brewery was only set up there in 1997 by the Pelsser family. The annual output has been maintained at around 1,000 liters, with 80 percent going to the local market and 20 percent for exports. Pelsser says that growing demand from China may prompt the company to consider increasing the annual output.

Pioneering move

Coincidentally, 1997 was the same year Yu Xiaoning shipped his first container of Belgian beer to China, little knowing that it would lead to a business worth 300 million yuan ($49.5 million).

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.