Chinese Beer Market Essay Example for Free

Chinese Beer Market EssayChinas beer application has enjoyed impressive egress over the past three decadesranking first in the world in terms of siding in 2010. But despite its achievements, the industry now faces serious challenges, including slowing growth rates and shorten profit margins. To break the bottleneck, the industry must look to new growth sources. Promising strategies could include introducing high-end products in Chinas urban markets and launching low- bell but still high-quality products in rural areas.To tell on these strategies work, Chinese beer companies will need to strengthen their operations on three fronts brand positioning, distribution and cost control. 2 Accenture Institute for High Performance Copyright 2012 Accenture.All rights reserved. Chinas Beer Industry recess the Growth Bottleneck Despite its achievements, the industry has encountered several obstacles. For one thing, spectacular growth rates from preceding decades have recently lost s team. From 26 percent during 1980-1990, production CAGR shrank to 12 percent in 19902000 and 7 percent during 2000-2009. And while per-capita economic consumption has increased in China, it pales in comparison to numerous other countriessuggesting extensive room for growth.The industry also has meager profit margins, in part because low-end products account for 85 percent of the domestic market. Fluctuations in prices for critical raw materials such as barley and hops soaring progress costs aimed at launching higher-end offerings and relentless price wars have whittled margins to 6. 4 percent3. 9 fortune points lower than the industry average. Figure 1 Beer production in China, 1980-2011 (million tons) Industry production has enjoyed an average complex annual growth rate (CAGR) of nearly 15%. CAGR 14. 7% 4899 69 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989.1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Since 1 980, the Chinese beer industry has seen blotto escalations in production as well as consumption. (See Figures 1 and 2. ) The top four playersTsingtao Brewery, China Resources Breweries, Yanjing Beer and Anheuser-Busch InBev accounted for 58 percent of the nations beer sales in 2011. Still, there is no national beer brand indeed, the industry has decidedly different characteristics across China. The big beer makers are concentrated in Chinas eastern, underlying and northeast regions.In these saturated markets, companies compete to serve urban consumers through well-established sales channels including supermarkets, restaurants and clubs. In Chinas rural regions, characterized by relatively few sales outlets and high transportation costs, beer drinkers end find a slim variety of offerings mostly at small stores. Source China industrial Economic Statistical Yearbook, data of 2010 from China National Sugar and Alcoholic Commodities Fair, EPS. Figure 2 Beer consumption in China, 2003- 2011 (liters) Per-capita beer consumption surged from 19. 6 liters in 2003 to 36. 36 liters in 2011. 36. 36.