As consumption of China’s traditional spirits and premium wines decline, a significant shift is under way across the beverage landscape. Craft beers are becoming a budget-friendly alternative for consumers seeking quality at an affordable price. But consumers are not going for the cheapest beers, but prefer premium craft beers, most priced at over CNY20 each, well over the per-unit price of CNY4 of a mass-market beer at local supermarkets. Beer has proven a surprisingly resilient section of China’s alcohol market amid high economic uncertainty. Production grew year-on-year in the first three quarters of 2025 and several breweries reported steady results, even with falling demand for more luxurious drinks like China’s traditional sorghum spirit and imported European wines.
But as consumers hunt for value, they are also no longer settling for the basics, pushing breweries to adapt. “Premiumization”, the development of products higher in perceived quality as well as price, has emerged as the industry’s primary method to ensure continued growth in this new landscape. “The rise in the average selling price has neutralized a broad-based volume slowdown in the past few years,” said Joseph Wong, head of consumer research at China Merchant Securities (HK). This slowdown marks the end of a growth model that defined the industry for decades, dating back to 1985 when a government initiative ignited the domestic sector with policy and financial support. Millions of U.S. dollars were channelled into constructing and upgrading breweries nationwide, with authorities allocating considerable resources to procure advanced equipment from abroad. That era fueled the rise of countless regional brands and made China the world’s largest beer producer. But this growth, built on low prices and high volume, was also accompanied by consolidation, as major manufacturers swallowed up smaller rivals.
Beer production by major brewers in China peaked at 50.62 million kiloliters in 2013 and has been on the decline since, as players fight for a larger share of a saturated market. Today, the top five producers represent over 90% of the sector, according to a report by Guosen Securities. Recent output remains around 30% lower in volume than its peak, but the industry’s profits have still increased. While this growth was initially driven by direct price hikes, it now stems from the introduction of higher-margin products, with several companies launching large ultra-premium bottles priced at hundreds of yuan each. Wong said he expects the trend of premiumization to continue, though he added the magnitude of change is likely to slow “amid the current consumption trade-down”. Future growth will rely on strategies such as product segmentation or introducing new items as upgrades.
The greater prevalence of smaller-batch brews illustrates to this trend well. While industrial beer is sometimes mixed with cheaper ingredients like rice and corn to cut costs, craft brewers emphasize differences in taste, catering to enthusiasts with all-malt recipes and distinct hop varieties. The quality of ingredients and distinct products allow brewers to set prices well above average and craft brewing offers companies significantly higher margins. Chongqing Brewery, controlled by Carlsberg, capitalized on this trend with its 2023 acquisition of the Beijing-based Jing-A, one of the country’s first craft brands. The company’s high-end products, including its craft beer line, now contribute to over half of its operating revenue. While its mainstream and economy segments saw slight year-on-year declines in the first three quarters of 2025, its high-end portfolio bucked the downturn, inching up 1.18% in revenue.
Many beer producers are exploring the cutting edge of the field, experimenting with new flavors and passing on the results to pubs like Urbrew and retailers of all sizes. In Chinese supermarkets, the beer selection – which commands rows of shelf space even as many stores relegate their spirits and wines to a single, more modest section – has evolved beyond the wall of green lager bottles seen in decades past. Nestled between household names and international staples are esoteric flavors featuring unusual ingredients like honey melon, jasmine tea and mung bean, produced by smaller brewers as well as the craft arms of the country’s leading breweries. Infusions which take inspiration from Chinese culture have significantly increased, with tea bases seeing particular success, said Marta Zhang, Senior Analyst of food and drink at market research group Mintel. She added that brewers were also tapping into rising health consciousness by rolling out low- and non-alcoholic options. “By continuously launching new flavors and enriching product lines, brands have enhanced the novelty and added value of beer consumption,” Zhang said, noting that novelty was one of the top factors driving consumer choice in the sector, the South China Morning Post reports.
