China's beer industry is expected to see a comeback, with consumers shifting towards premium brands

China, the world's leading producer and drinker of beer, is anticipating a resurgence in beer consumption later this year. This upswing is expected to favor premium beers and is likely fueled by a combination of upcoming major sporting events like the Olympics and hotter summer temperatures.

Analysts at CGS International predict a rise in beer consumption in the latter half of 2024, following a decrease in sales volume compared to the same period in 2023. Events like the ongoing Euro 2024, the upcoming Copa America, and the Paris Olympics, alongside warmer weather, are all expected to contribute to a surge in beer demand.

According to a report by CGS analysts Lei Yang and Sun Feifei, higher-than-anticipated sales of premium beers in restaurants and bars are projected to lift the industry. This trend is further supported by data from the Chinese online database QiChaCha, which indicates a surge in beer-related businesses in China exceeding 7,000 last year. QiChaCha also notes a clear trend towards high-end beer offerings in China, with the Euro 2024 acting as a catalyst for the "beer economy."

This shift towards premium beers is expected to improve profit margins for breweries. Lower barley prices, which are reducing production costs, are another contributing factor. Sun and Lei cite data from China's customs agency and their own research, showing a significant decrease (30% year-on-year) in the average price of imported barley between January and April 2024, reaching $273 per ton. They predict this trend to hold steady throughout the remainder of 2024.

Beyond lower barley and packaging material prices, the analysts anticipate China's beer industry to benefit further from a product mix upgrade in 2024. China isn't the only country experiencing this recovery. A Reuters report from May 2024 highlighted a projected increase in global beer sales by major brewers after several quarters of decline. The report also mentioned positive signs of recovery, with Heineken, the world's second-largest brewer, reporting its first quarterly sales volume growth in over a year during the first quarter of 2024. Similarly, rival Carlsberg reported a rise in sales volume for the same period, following a period of decline. According to the report, Carlsberg CEO Jacob Aarup-Andersen expects brewers to benefit from upcoming events like the Olympics and Euro 2024. He expressed optimism for positive sales volume growth moving forward, particularly due to rising sales in Asia.