When ranked by volume, China’s beer market is the largest in the world. At a value of US$76 billion, the industry imports approximately eight million tons of barley per year from Australia, Canada, and France to supply domestic production. Britain has now moved to gain a share of China’s growing premium beer market, signing a $151 million deal for the exportation of barley to China over the next five years.

 

Due to increased levels of discretionary incomes, Chinese consumers are ‘trading up’ in their beer choices. Chinese demand for high-end premium and craft beers, which are more inclined to use barley for production, is soaring, even as demand within the broader, standard market has flat-lined. Euromonitor reports that in 2014, the premium beer market in China grew at approximately 20% compared to the marginal growth of 0.5% seen in the wider market. However, despite this growth, craft beer in China only accounts for less than one percent of the country’s total market, indicating vast promise for growth.

 

This deal, which calls for the purchase of about 150,000 tons of British barley per year, marks the first instance where Beijing has approved British imports of barley, according to Elizabeth Truss, British secretary of state for environment, food and rural affairs, reports Reuters.

 

Although China’s craft brewery sector holds great potential for growth, it still faces challenges on multiple fronts including a lack of available funding, a lack of know-how and expertize, wary consumers, and government policies that are currently focusing on supporting large-scale and multi-national brewers. But as consumer incomes increase and the sector matures, craft brewers in China expect that prices will moderate and craft breweries will gain market share.