China beer consumption expected to recover in the second half

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China ***** consumption expected to recover in the second half

Tourists takinf part in a ***** carnival in Qingdao, Shandong province, China, July 1, 2023.

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China, the world’s largest producer and consumer of *****, is expected to see a consumption recovery in the second half of this year, favoring premium offerings, on the back of sporting events.

CGS International expects a recovery in ***** consumption in the latter part of the year following an estimated decline in volumes in the first half of the year compared to 2023.

Sporting events such as the ongoing Euro 2024, the upcoming Copa Americana and Paris Olympics, coupled with hotter weather, are expected to drive up demand for the beverage.

CGS analysts Lei Yang and Sun Feifei highlighted in a report published last month that higher-than-expected sales of premium ***** products in the catering and entertainment channels are expected to lift the sector.

Pointing to the Euro 2024, ******** online database QiChaCha noted that bars and stores have been decorated with ********* Cup merchandise and they are offering sports-themed meals to cash in on the frenzy.

“The ***** market has shown a clear growth trend, and major ***** brands have competed to launch products and services that match scenario-based consumption,” according to a note by ******** online database QiChaCha, which revealed that *****-related enterprises in China had grown by more than 7,000 last year.

“The ********* Cup ignites the ‘***** economy,'” the firm said, adding that China’s ***** industry had shown a clear trend towards high-end offerings.

The trend favoring higher-end ***** is expected to boost margins for breweries, further aided by cheaper barley prices that are driving costs lowers, Sun and Lei said.

They cited data from China customs agency and their own research, showing that the average imported barley price fell by 30% year on year in January to April to US$273 per ton. “We expect this trend to continue in the whole of [2024],” they said.

They also expect China’s ***** industry to continue to benefit from a product mix upgrade, besides lower barley prices and packaging material prices in 2024.

China is not alone in seeing this recovery.

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highlighted that global brewers were set to sell more ***** this year after several quarters of declines.

The report added that Heineken, the second-largest brewer in the world, had reported its first quarterly volume growth in over a year in the first quarter of 2024. Rival Carlsberg also reported higher volumes in the same ******* after several quarters of decline.

Carlsberg chief executive Jacob Aarup-Andersen said that brewers will be boosted by events such as the Paris Olympics and the Euro 2024, according to the report.

“We do expect positive volume growth going forward,” Aarup-Andersen said, adding that the brand will benefit particularly from rising sales in Asia.

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Lei and Sun have singled out two ******** ***** breweries, Tsingtao Brewery and China Resources *****, as major beneficiaries of the expected rise in consumption. They have given the ***** sector an “overweight” rating.

The duo, however, said intensified price competition among breweries would pressure margins.

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