Jenny Chan 陳詠欣
Jul 29, 2013

Asian palates thirst for craft brews

SECTOR STUDY: As beer consumption rises in Asia and tastes grow increasingly refined, consumers have started to look for more niche products with a stronger flavour profile.

Craft fare: Great Leap caters to Asia tastes
Craft fare: Great Leap caters to Asia tastes

Gone are the days when the brewing of craft beer was the exclusive purview of shifty types working alone in their cellers. These days, even professionals are quitting their day jobs and getting in on the business.

Craft beer was previously popular among what used to be nano-communities of beer enthusiasts in the West, but the next chapter in the industry’s frothy future is being written by the East. According to the Brewers Association (BA), a not-for-profit trade group that represents small and independent craft brewers in America, last year’s exports to the Asia-Pacific region increased substantially by 162 per cent compared to 2011. 

Shipments to Japan alone jumped 57 per cent by volume. American breweries also made strong gains in Australia, China, Hong Kong and emerging markets such as Thailand. 

The surge in the popularity of niche, boutique beers has resulted in a smörgåsbord of up to 400 brands at festivals such as the Beerfest in Singapore and Beertopia in Hong Kong, and has made brewers of mass-produced lagers sit up and take notice. 

In fact, the hand of bigger players has already been forced. Asia-Pacific Breweries, one the region’s behemoths operating 30 breweries, including in far-flung places like Mongolia, Papua New Guinea and the Solomon Islands, made a decision back in 2007 to revive its craft beer arm Archipelago that was active in the 1930s. 

American craft beer exports (2012)
Source: Brewers Association

Rank

Export Market YOY Growth (%)
1 To Asia-Pacific 162
2 To Brazil 150
3 To Canada 140
4 To Japan 57
5 To Western Europe 5.6

Its brand portfolio of bespoke handcrafted beers now comprises four permanent brews: the Bohemian Lager, Belgian Wit, Summer Ale and Irish Ale.

In flavour profile however, these brews are mild compared with the sweet-yet-fiery Honey Ma Gold from Beijing’s Great Leap Brewing: an amber ale made with mouth-tingling Sichuan peppercorns and honey sourced from the owner’s family apiary in Shandong Province. Or Liu the Brave, a peach molasses stout with a real-life backstory: it was named in tribute to the owner’s father whose only existing photo was burned in an accidental fire.

Because such artisanal beers cater to people’s growing taste for ‘beer with character’, they are enjoying a boom in Asia, prompting folks like Jonathan So to quit his job at a software company to organise Beertopia full-time, and Carl Setzer to leave his consulting firm to dedicate himself wholly to Great Leap Brewing. 

While not as well-tracked as their mainstream counterparts in terms of on-trade and off-trade sales, craft beer growth can be seen via the rising numbers of microbreweries and brewpubs. 

Today in Japan, arguably the largest craft beer market in Asia, more than 260 brewers are producing uniquely Japanese glugs (such as those made with miso paste) from Okinawa to Hokkaido. The output of microbreweries is growing more than 15 per cent a year, according to Ryouji Oda, president of the Japan Craft Beer Association. 

Australia, a far second, consists of over 130 microbreweries with the consumption of craft beer increasing by six per cent every year.

An academic analysis of over 1,000 craft beer labels recently published in The Journal of Marketing Management revealed that being local and using personal story-telling was a key element in the branding strategy of craft breweries. Zoran Svetlicic, partner of Shift, which designed the identity, packaging and graphics for Great Leap, said the client “did not want the marketing to scream about the beer, but the beer to sell itself”.

EXPERT OPINION Craft brewers in Asia will rely on social media

Spiros Malandrakis, senior industry analyst, alcoholic drinks, Euromonitor

What makes a craft beer, well, craft, is the experimental flavour profile, word-of-mouth promotional strategy, and the brewer’s independent nature. Pricing then tends to be at premium levels. Premiumisation is not emblematic of the beer segment in the majority of Asian countries, however.

Most other beers belong to the economy or standard segments, so it is difficult to premiumise craft beer, unlike wines and spirits.

There is room for growth as craft beer is still a very niche trend in Asia, so craft brewers have a first-mover advantage. Furthermore, per-capita consumption of beer in mature markets is already high.

As an initial incubation period that started across the United States and the United Kingdom now comes to a plateau, the rest of 2013 will see big beer players hijack the craft
beer market with more complex and stratified speciality portfolios.

In the next couple of years, Asia may catch up with Europe and America.
We will also see major beer players borrowing concepts straight from the marketing playbook of craft beer in a virtual battleground for sales.

Twitter followers, Facebook ‘likes’, viral videos and a solid presence in the blogosphere and social media will become as important as the once-totemic television and print-focused promotional campaigns. Diageo’s detrimental Twitter spat with the beer industry’s agent provocateur Brewdog should and will serve as a cautionary tale for those focused on damage control and new media penetration.

UPDATE 2/10/2013: This article has been corrected to remove a sentence which quoted APB's Robert Beck out of context and without his knowledge.

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