There is still much room for premium beer in China as craft gains traction

Carlsberg Group continued to strengthen its position in China in 2024, driven by the ongoing premiumization trend in the country's beer sector.

In 2024, the group reported a 1.9 percent year-on-year increase in full-year revenue, reaching DKK 75.01 billion ($10.37 billion), while operating profit rose 2.8 percent to DKK 11.41 billion.

In China, Carlsberg's largest market globally, the Danish beer producer saw its market share increase despite a 1 percent decline in total sales volume. The drop was attributed to adverse weather conditions in the summer and inventory reduction efforts.

During an earnings call, company executives said that inventory reduction was completed by the end of 2024, positioning the beer producer for a strong start in 2025.

Jacob Aarup-Andersen, group CEO of Carlsberg, said that the Chinese beer market declined by 4 percent in 2024 due to a weak consumer environment and poor summer weather conditions. However, he said that the market showed signs of recovery in the fourth quarter, benefiting from easier comparisons with the previous year.

"We maintained our positive market share trajectory," said Aarup-Andersen. "We gained an estimated 30 basis points in market share. While premium beer sales in major cities continued to grow, lower mainstream volumes in our traditional western region strongholds led to an overall 1 percent volume decline."

Carlsberg experienced 3 percent growth in the first half of 2024, but volumes faced some pressure in the second half due to high comparables, poor weather and destocking.

"We believe destocking was completed in December, enabling us to enter 2025 with normal stock levels. This is reflected in a solid start to the year," Aarup-Andersen added.

While revenue per hectoliter was slightly negative due to pricing stability and unfavorable channel mix, the company saw strong growth for Carlsberg and Wind Flower Snow Moon, a high-end beer product based in Yunnan province. However, the super-premium brand 1664 Blanc declined due to weaker demand. Tuborg, a brand of Carlsberg recorded modest growth.

In 2025, Carlsberg aims to further expand its market share in China and outperform overall market growth.

"This also means that we will continue to invest. So there is no need to worry that we are not investing enough in China," Aarup-Andersen said. "I can assure you that we will invest in sales and marketing in China."

Industry experts said that self-pleasing consumption, diversification and personalization are shaping the next phase of China's premium beer segment.

Zhao Chunwu, president of CR Beer (Holdings) Co Ltd, said at a recent conference that while the trend toward premiumization in China's beer market remains strong, consumer preferences, market dynamics and distribution channels are evolving.

Craft beer, in particular, has steadily gained traction, now holding 8 percent of the domestic beer market. This shift has led to a surge in new craft and microbreweries catering to niche markets, according to Yicai.

Currently, China has over 10,000 craft breweries with an annual production of less than 100,000 metric tons, according to the report.

According to Qichacha, a business information platform, 1,838 new craft beer-related enterprises were registered in China in 2023, marking a 21 percent year-on-year increase.

In 2024, despite overall industry slowdown, 1,618 new registrations were recorded by November, maintaining the same growth rate.

Industry players are optimistic about the premiumization trend.

Jan Craps, CEO and co-chairman of AB InBev Asia Pacific, said during AB InBev's Q3 earnings call that while only 17 percent of beer consumed in China is classified as premium (priced above 10 yuan or $1.37 per unit), compared to 40 percent in Western markets, there is significant room for high-end beer in China.