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E-Malt.com News article: China: Wholesale beer prices continuing to rise
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Wholesale prices of beer are continuing to rise in China as producers move to compensate for rising costs and pay for industrial upgrading, the Global Times reported on March 12.

Lin Changming, a beer dealer based in Hangzhou, capital of East China's Zhejiang Province, said that he's seen the wholesale price of Snow Beer, a Beijing-headquartered brand, go up by 3 yuan (47 cents) to "dozens of yuan" per 12-bottle case since the beginning of the year.

Other beers, like US brand Budweiser, are joining in.

"Budweiser has many different beer types but their prices generally surged after the Spring Festival, some more, some less," Lin told the Global Times on March 12. Industry website jiuyejia.com reported on March 11 that wholesale prices for some types of Budweiser surged to about 85 yuan per case after the Spring Festival from 57 yuan before the holidays.

AB InBev, maker of Budweiser, didn't reply to an interview request as of press time on March 12.

According to jiuyejia.com, other brands like Tsingtao Beer and Yanjing Beer had raised prices even before Budweiser's move.

A source at Denmark-based beer maker Carlsberg told the Global Times on March 12 that China's beer market is dominated by a few companies, so there are less needs for producers to compete on price.

"A collective price rise is easier to achieve in this market structure," he said, adding that Carlsberg had also raised its price recently, although he declined to disclose exact numbers.

"We as a distributor don't want to see this happen, as the price rise will eventually be paid by consumers, which might hurt our business," Lin said.

According to Lin, one reason for higher prices is that the costs of raw material, including packaging like paper and glass, have risen in recent months, forcing beer makers to adjust.

Zhu Danpeng, a Guangzhou-based food industry analyst, told the Global Times on March 12 that Chinese consumers are becoming more affluent and demanding about the quality of their alcoholic beverages.

"Companies are taking measures to achieve upgrading, and one move that some domestic beer companies may make is to acquire prestige brands," Zhu said. One example, he said, was the reported possible cooperation between State-owned China Resources Snow Breweries and Heineken.

Mergers cost a lot of money, which might be a reason behind the beer price rises, Zhu said.

The companies' drive to reform comes after years of decline for the beer sector. According to media reports, only in the fourth quarter of 2017 did the sector start to recover.

A beer dealer surnamed Chen based in Harbin, capital of Northeast China's Heilongjiang Province, said that consumers are also shifting away from "impulsive" consumption to "rational" consumption.

"Traditional mass-produced beer doesn't have much room to rebound," Chen told the Global Times on Monday, adding that craft beer, which offers better quality, is on the rise.

In addition, major beer producers have cut the number of distributors that handle their brews, causing sales to slump, he said.

"In Harbin, before 2014 there were about 300 beer distributors. Now there are only about only 100. I think many beer makers in China lack a sustained and pragmatic sales model," he said.

Zhu nevertheless said that in 2018, beer demand will pick up, as "2018 is a big year for sports events such as the World Cup and the Asian Games, which usually drive the growth of beer sales," he said.

13 March, 2018

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