Save our suds from the big beer bullies

By Greg Fountain

In case this column doesn't make it immediately obvious, I might as well come right out and say it — I like beer.

I'm partial to a Tsingtao, have experimented with Snow and can often be found supping from a cold can of Beijing's own Yanjing.

But what I enjoy most is a nice, rounded craft beer — something with depth, flavor and tantalizing taste.

In Yorkshire, we call such beverages "hand pull", because they're most often served by way of a beer engine — a manually operated device for pumping up the lustrous liquid from a cask in the pub's cellar.

Strictly speaking, this would more correctly be termed cask-conditioned beer or "real ale", which similar to the United States-style craft beer that China is more familiar with, owes much of its popularity to a backlash against mass-produced lagers that began in the 1970s.

Between 1978 and 2017, the number of breweries in the US rose from 42 to more than 2,750, with virtually all of that growth attributable to craft brewers. Over the same period, the number of "real ale" brewers in the UK rose to more than 700 four times what it had been in 1971.

According to trade group the Brewers Association, the US craft beer market was worth $23.5 billion last year.

Some predict that a similar craft beer explosion will soon hit China, which is why I read a recent Fortune article on the subject with great interest.

That piece, titled "China's New Craft-Beer Bully" outlined global beer behemoth Anheuser-Busch InBev's attempts to muscle in on the Chinese market at the expense of local players.

Apparently, the "heart of its strategy" is to "squash—or someday soon acquire—small breweries before they have a chance to capture market share". It does so by undercutting smaller operations, leveraging its size and ability to throw money around.

The reason why is simple — it doesn't want to miss the craft revolution, like it did in the US.

By offering eye-watering sums of cash, big brewers like AB InBev can induce bars to remove all competing brands from their taps. Not all outlets will do so, but many — as the Fortune article points out — struggle to turn down the kind of money that's on offer.

China's current regulatory environment also favors these big foreign companies — in the US, brewers can't monopolize the beer a bar offers or control distributors, but there are no such restrictions here.

Rules around product safety, meanwhile, prevent many local craft brewers from running in-China bottling operations, which again puts them at a disadvantage.

At present, craft beer only accounts for a tiny fraction of China's estimated $80 billion-per-year beer market.

But as the country gets ever wealthier and the size of its middle class increases, tastes will change. Perhaps it's high time to rethink policies that favor the big beer bullies over homegrown entrepreneurs?

Broadcaster

Greg Fountain is a copy editor and occasional presenter for China Daily. Before moving to Beijing in January, 2016 he worked for newspapers in the Middle East and UK. He has an M.A in Print Journalism from the University of Sheffield, a B.A in English and History from the University of Reading.