Shanghai’s Microbrewery Boom Mirrors Austin

Global China — By Jasmin Sun on June 23, 2011 11:20 am

By Jasmin Sun
For ChinaInFocus

Looking at it by the numbers, Tsingtao should be considered a very good beer. In fact, the omnipresent lager is the top-selling native beer in China, which makes it the leading brew of the world’s most highly populated country. Tsingtao also exports bottles to 62 other countries and regions. In a country of 1.4 billion people, that means a lot of mouths that favor the taste of Tsingtao.

Yet if mass-market beer is doing so well in China, then what’s fueling the recent appearance of microbreweries—and the artisan beers that come with them—in Shanghai?

Since 2006, four new microbreweries have opened in Shanghai to join the Bund Brewery, an expat-owned small production brewery established in 1998. The Boxing Cat Brewery offers two locations within the city’s former French Concession in addition to a dedicated brewery in Shanghai’s Minhang district. In the Gubei area, Shanghai Brewery and Ganlanba have received local media attention. In Pudong’s Kerry Hotel, The BREW’s Australian craft beers have caught the eyes of trade workers and city beer enthusiasts alike.

“I see a lot more passion in [places like The BREW],” said Boxing Cat head brewer Michael Jordan. “You can see a real commitment to making a proper craft beer instead of just making a profit off of it.”

As recently as 2009, research house Euromonitor predicted domestic beer consumption costs in China would reach 457.9 billion RMB ($70.4 billion) by 2014, a massive jump from the 305.3 billion RMB ($15.7 billion) worth of beer consumed in 2009. But China’s beer market is fragmented, with roughly 50 percent going to the country’s top six mass-market brands, most notably Tsingtao, Harbin and Yanjing. The rest of the market is made up of smaller, more local beer makers, including microbreweries.

To target the remaining market, microbreweries like Boxing Cat hone in on the city’s expat population. From there, it’s only a matter of time and successful advertising before what was initially aimed at a niche market extends to include members of the newly forming Chinese middle class.

“Expats already know what microbreweries and craft beer are all about,” said Boxing Cat managing partner Lee Tseng. “After that, what eventually works as a good stepping stone is to develop a good presence with the locals. Once they start seeing your brand as something they’d like to look into,” it’s easier to draw a crowd with enough spending power for purchases like craft beer, he said.

The boom in Shanghai’s craft beer industry mirrors what has taken place in Austin, Texas, since 2008, when a new wave of small production breweries like (512) Brewing, Thirsty Planet, Jester King and Circle Brewing emerged on the local scene.

In a Skype conversation from Blanco, Texas, Real Ale Brewing Company’s head brewer Tim Schwartz offered the idea that Texans’ growing awareness and excitement toward craft beer was the galvanizing force behind many new founders’ decisions to open microbreweries of their own.

“A lot of this wave [of growth] has to do with the fact that the Texas beer consumer has become more educated and more adventurous about craft beer,” he said. “The demand for craft beer in Texas and Austin is at an all-time high … It’s an interesting time for Austin brewing.”

The increasing popularity of microbreweries in Shanghai might have less to do with the quality of the beers produced than with the hip, trendy restaurants built around each one. In a country obsessed with mian zhi, or how one’s reputation or status is perceived by others, eating dinner and drinking a beer at a cool new restaurant offers more cachet than the fact that the beer they’re holding is fresh and locally produced.

“It’s not just about the beer,” Bignold said, “it’s got to be about the venue and the service as well. The beer itself will take a bit longer to grow on the Chinese consumer. Luxury goods and status goods have been accepted well, but beer isn’t necessarily something that has status attached to it.”

When it comes to drinking craft beer—traditionally seen in the West as a backlash against imbibing mainstream mass-market beer—marketing to Chinese locals has to be carefully thought out. As Tseng tells it, “[The craft beer] trend in America was borne out of passion. In China, this trend was borne out of saving costs.”

To bring locals in to Boxing Cat, Tseng offers patrons free samples of the rotating artisan beer selection in addition to generous happy hour specials. “We want them to get a chance to taste the beer and associate craft beer with beer made with great quality ingredients,” he said.

Despite the different motivations behind the recent wave of new microbreweries in both cities, it seems that it’s this ultimate goal of providing customers with what owners and brewers believe is the best beer available that brings the burgeoning craft beer markets in Shanghai and Austin together.

“At any craft brewery,” said Schwartz, “you’re going … to try and educate the public and elevate the customer’s beer appreciation. As far as I know, that’s always been the mission.”

Perhaps long-time Boxing Cat employee Ellaine Navarro has it right when trying to predict if artisan beers will continue to be accepted by local Chinese in the future. “They would definitely like it,” she said. “They just haven’t gotten a chance to try it.”

Tags: Blanco, brew, craft beer, Real Ale