China has untapped potential for Aussie craft beer: Expert

David Thomas

China’s growing middle class presents some fantastic export opportunities for Australian brewers who are focused, patient and prepared to act immediately, according to an expert on the region.

While it is true that Chinese palates are new to craft beer, the same could have been said for wine a decade ago, China expert David Thomas told Brews News.

“It’s very easy to write them off at the moment but I would say give it another five or 10 years and they’ll be way ahead,” he said.

“A lot of people used to turn their noses up at the fact that the Chinese used to mix their wine with coke, and that they really didn’t appreciate the high end premium wine.

“That’s changed very quickly and now you can’t go to China without drinking the very best wine.

“Now they are growing their own grapes and in ten years’ time I’m sure they’ll be making pretty good premium wine. I think beer is a little bit further behind but we shouldn’t wait – we should move,” he said.

Thomas is founder of the Australia China SME Association, which aims to help small and medium-sized enterprises export to China.

“We’ve got about 300 million people now in China who are middle class, which means they have relatively high disposable income, they can afford to go on holidays and they can buy four or five investment properties and fancy cars,” he says.

“So they can afford also to buy the best wine, the best food and potentially other products too.”

Start here in Australia
Thomas says interested brewers don’t have to leave the country to begin exploring the opportunity.

“There’s a million Chinese people living here who are all migrants… this is a great place to test the market without having to actually go to China,” he says.

“You can do some focus group testing. They do have different palates to us, they may experience the product slightly differently to the way we expect, so that’s definitely worth exploring.

“Of course the other thing is that they all have connections back to China which could open up the door for you if you have the product,” says Thomas.

China misconceptions
Thomas says Australians typically think of China as being “just one market” when in fact it is many different markets, each with distinct demographics.

“In Shanghai, for example, you’re in a global market. You’re competing with everybody from Europe, UK, America, where there are parts of China where you wouldn’t compete with anyone,” he says.

“You need to do your research and it’s not hard now – it’s a lot easier than it used to be. For the price of a business class flight you could probably get a very good detailed report on where your product will thrive and why, so I think that’s essential.”

Keep control

Thomas says brewers should avoid using external distributors in China because they will quickly lose control of their brand and pricing structure.

“Eventually you’ll end up finding that you might be disrupting more products but you’re not making any more money,” he says.

“Australia is a small market and premium beer is an even smaller market. [In China] we’re talking about a very big market, over a billion people, so we don’t need to have national distribution to be successful.

“We can start very, very small and once we get the margin there, then we can make money.

“What you never want to do in China is get into the mass market, because there’s no money to be made there, the margins are way too thin.

“You want the premium market, you want to establish good relationships with people that appreciate and value premium product, that are willing to pay and you start small.

“Get on the ground, build the relationships, get people trying and using the product, get a few advocates and work into their networks.

“You keep your margin, you keep your brand and you start building from the ground up.

“Unfortunately there are no short cuts, you have to build sustainable relationships with people who love you and love your product,” advises Thomas.

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