Analysis of beer market in China (on Russian)
Beer market of Ukraine: big three losing weightIn 2016, fast increase of excises and resulting price spike stood in the way of the beer market stabilization. Most of competition (as well as mass sorts) moved to the economy segment of the market. The biggest losses were incurred by the leading three, especially Obolon, which again experienced pressure after reallocation of Efes market share. However, one should already speak of TOP-4. Group Oasis CIS (PPB) became a strong player and competitor to transnational companies. Besides the net sales of many regional medium breweries look rather good and 16-fold cost reduction wholesale trade license for craft brewers opens up a possibility of rapid growth in 2017.
Analysis of beer market in China
China’s transition to a “new normal” reality backfired on the brewing industry unexpectedly. Stagnation and subsequent market decline resulted from dynamic social and economic changes. There has emerged a “two speed” market where the medium class significance is growing, yet the share of main beer consumers, “blue collar” is decreasing. Also the inflow of consumers is shrinking, as demographics stopped being a growth driver. Finally, beer is giving way to other alcohol drinks....
Beer consumption in Russia
General characteristics of beer consumption
Rate and frequency
The Size of Populated Area
Incomes and Expenses for Beer
The Characteristics for the "Core" of Beer Consumers
Places of Consumption
Places of Purchase and their Choice. Sale Regulation.
The goal of this review is to analyze the factors influencing the beer consumption volumes. We did not focus on specific tasks usually solved by market experts of brewing companies, as it requires detailed researching of certain consumers’ groups. But we consider that the width of the review allows it to be the basis of preliminary analysis.
We have partially examined the issues put before the regulating agencies, that is, the estimation of correlation of alcohol affordability and its consumption. We use WHO norms when ranging consumers by groups depending on volumes and frequency of alcohol consumption.
Our review is based on the data of “Russian monitoring of economic welfare and health of population (RLMS-HSE)” which is carried out by National research university – Higher School of Economics and CJSC “Demoskop” involving Population Center of North Caroline in Chapel Hill and Sociology Institute of Russian Academy of Sciences. (Sites of RLMS-HSE investigation are http://www.cpc.unc.edu/projects/rlms and http://www.hse.ru/rlms).
The monitoring program includes information concerning household structures, family budgets, living conditions, health conditions, food quality and so on. The research RLMS on current sampling is carried out annually by standard questionnaire consisting of several hundreds of questions. Such comprehensive data allowed us to analyze beer consumption by many aspects.
One important detail increasing RLMS research representativeness is removal of seasonality factor, which is particularly important for beer consumption assessment. All field reviews were carried out in “low season”.
Besides, using information for several years we made an attempt to determine certain tendencies of beer consumption. Before 2008 “beer” and “home brew” in RLMS belonged to the same category. That is why we have to restrict our analysis to three stages of surveys carried out during the following periods 10.2008 – 12.2008, 10.2009 – 12.2009 and 10.2010 – 03.2011. As these surveys were made at the turn of years, the periods will be further referred to as 2008/2009, 2009/2010, 2010/2011.
In the course of survey 2010/2011 it was found out that 68% of Russians consume alcohol at least sometimes and 50% of them drank alcohol within 30 days before the survey. And in this group 54.1% (or 3 979 persons) claimed to have drunk beer. The data for three years demonstrate reduction of beer consumers' share - in 2008/2009 it was 56.5%, in 2009/2010 - 54.7%.
One of the most significant criteria is the average rate of consumption. Depending on the volume of consumed beer*, we divided the respondents into four groups.
* Beer consumption rates which are safe for health have been calculated according to WHO standards and International work organization. For calculation of safe consumption rate of beer the notion of "unit" (U) is used. 1 U = 12.8 g of pure alcohol. One 0.33 l. bottle of average beer contains 1U and one bottle of strong beer contains 1.5 U. On this basis it is recommended not to exceed the amount of 0,5 l. for males daily and 0.33 l. for female not more often than 4 days a week.
1. “Light” consumer usually drinks 0.33 l. per day. These beer drinkers were comparatively not numerous – …%. The share of such consumers has been considerably decreasing since 2008 besides and there is the tendency of stabilization.
2. The biggest group is “moderate” consumers. They usually drink 0.5 l. at a time which apparently corresponds to one glass or one bottle of the most common volume. “Moderate” beer consumers account for …% of the total number, and a tendency of its gradual reduction can be observed.
3. Group “beer lovers” includes those who drink 1-2 l. of beer per day. Though the number of “lovers” is much smaller than “moderate” drinkers in the average they consume … as much beer at a time. It is becoming obvious that this is the group consuming the bulk volume of beer in Russia. The share of “beer lovers” has been substantially growing since 2008 showing the tendency of stabilization.
4. Consumers usually drinking 2.5 l. of beer and more at a time belong to “heavy” group. They constitute …% of respondents, but as they drink very much beer their role in the total consumption volume is rather noticeable.
Thus, it is possible to speak of the tendency to heavier beer consumption.
One more equally important criterion is the frequency of beer consumption. Depending on the frequency of beer consumption we divided consumers into three groups.
1. Beer was “rarely” consumed by the respondents who drank it 1-3 times during the month before survey. The share of people rarely drinking beer in the total number of consumers grew according to 2010/2011 survey results having reached …%. Thus, this is the main share of Russian consumers.
2. About …% of consumers drink beer “regularly” and this share is relatively stable. These are people who buy beer 1-2 times a week.
3. Those who consume beer more often than 8 times a month belong to “frequent” beer drinkers. This group is the least numerous but its share has been rapidly decreasing. By the survey of 2010/2011 only …% of beer drinkers went to “frequent” group.
Thus, during three years there was an obvious tendency to reduction of beer drinking frequency.
Further we will overlap these two characteristics “average rate” and “frequency” in order to see them in combination when we have different consumption types. We will also assess the impact of these groups on the total beer consumption in Russia over the month.
Thus, almost one third of the total number of beer consumers drink beer rarely and in moderate amounts. The share of people drinking a bottle or a glass of beer several times a month is slowly increasing. But their share in the general volume of consumed beer is rather small, it amounts to about …%.
The second biggest consumers’ group, that is, about …% consists of “beer lovers” who also drink beer rarely. But due to considerably bigger amounts their share in the general volumes of Russian consumption is twice bigger than that of numerous “moderate” – about …%. Besides, the group of people drinking beer “seldom, but to the point”, is growing dynamically.
About …% of “beer lovers” consume it regularly. Despite this relatively small share they monthly drink more beer than any other group. They account for about a … of all beer consumed in Russia.
However, “regular beer lovers” took the first place not long ago. Until several years, a … of Russian beer was consumed by “frequent beer lovers” who now constitute only …% of all beer consumers. As a result of rapid reduction of their group, the volume of consumed beer has been falling too and today amounts to …%.
The fourth by size (…%) group is “light” consumers, who drink beer from time to time. Due to low frequency and consumption rate this group practically does not influence the general volume of consumption.
The number of “heavy” consumers who are at the opposite side of the spectrum “rate/ frequency” is not big at all. The group of people who drink beer frequently and in big quantity comprise only …% of all beer consumers. But their share in the total volume of beer consumed monthly is rather considerable – …%. The number of these active consumers is reducing, but the number of those who drink a lot of beer but less frequently on the contrary grows.
It is known that age has big effect on frequency and rate of beer consumption.
For a start there is a surprisingly clear dependence between age and the rate of monthly consumption. Certainly till the age of 20 Russians do not drink much beer (at least so the survey claims) but in general monthly beer consumption reduces in almost linear dependence to age increase. While young people of 20-29 consume almost a … of beer in Russia, people over 60 drink only …%.
Recently a rise of consumer number aged 20-29 and 30-39 has been observed. In quantitative relation these beer consumers group was quickly growing due to rarely drinking “moderate” consumers and “beer lovers”. But in the general consumption volume this group growth was mainly the impact of “beer lovers” who drink beer rarely or regularly.
At the same time there was a rapid share reduction of beer consumed by people aged 40-49, which can be explained both by decrease of such consumers’ number and consumption frequency decline, mainly by “beer lovers”
The share and structure of groups older than 50 were relatively stable. The survey results concerning quite young consumers, namely its share reduction, arouse doubts as to their accuracy because of self censorship.
Gender has a considerable impact on the rate and frequency of beer consumption.
2/3 of beer consumers are men, and … of the general beer consumption are accounted for by them. Accordingly, tendencies of beer consumption are mainly formed by male population.
Over last several years there was a reduction tendency of beer consumption frequency by males, namely, the number of people who consume it rarely grows, while the number of those who drink it often declines. At the same time at the account of “light” and “moderate”, the share of “beer lovers” increases. Overlapping of these two tendencies during three years has allowed the share of “beer lovers” in the general beer consumption to grow from … to …%.
The share of women in the total number of beer consumers reaches one third and their share in the general consumption volume amounts to …. Among ladies who drink beer … do it seldom, and the biggest groups consist of “moderate” and “light” consumers. At the same time the bulk volume of beer consumption is accounted for by few “beer lovers” drinking beer “regularly” and “frequently”. In spite of number reduction of female consumers, their share in the general beer consumption is growing due to “beer lovers”.
We have to say that female “beer lovers” considerably exceed WHO safe rates of alcohol consumption. Thus, inside the group they can be considered “heavy consumers”.
RLMS allows to research beer consumption character in three of the four types of populated areas, namely, region center, small city and village (data concerning settlements are not representative because of small sampling of beer consumers). Let us compare the consumption character in every type of populated area to information average for Russia (see chapter "Rate and Frequency").
A region center is distinguished by bigger share of frequently and often drinking "beer lovers", as well as "moderate" consumers, at the account of the same groups by drinking rarely. Obviously in big cities they have more means and more opportunities for regular beer consumption than in smaller populated areas.
Accordingly, a small city differs from the common Russian situation by bigger share of rarely drinking "beer lovers" and by smaller share of frequently drinking "moderate" consumers. There are also much fewer "light" rarely drinking consumers, perhaps because of smaller female consumption.
The distribution of roles in villages is considerably different. This difference can be seen in all groups notwithstanding the rate of consumption, namely, there is relatively bigger share of rarely drinking consumers and smaller share of frequently and regularly drinking ones. The main tendencies concerning rates and frequency do not differ much from the average for Russia.
In the course of RLMS not only individuals were questioned but also whole households. As a result families’ weekly expenses for different categories of food products including beer as well as volume of purchased products were determined.
… of families who buy beer consume 1.5-2 liters per week. Though it is not they who make the biggest contribution into the volume of consumed beer. Two other groups have larger shares with consumption volume 2.2-3.5 liters and 4-9 liters per week. They account for approximately …% of the total families’ number and …% of consumed beer.
Similar picture is revealed when we assess beer consumption by value. 60-99 rub. per week is spent by the largest group of families (…%). But smaller group of families (…%) each spending 150-249 rub. has the highest total expenses.
It is also interesting to assess distribution of volumes and cost of consumed beer depending on the average income per a family member. We divided all families drinking beer by 8 comparatively equal groups.
The smallest volume is consumed by families with “middle -” income level, i.e. 8 000-9 500 rub. per a family number. The most active beer consumers belong to the groups with “low” income i.e. (4 800 – 6 700 rub.), “high” (13 500-18 000 rub.) and “very high” income (>18 000 rub.)
We did not notice any clear correlation of the income level and consumption scope by volume. The only considerable exclusion is that families with very high income per capita consume almost twice as much beer as other family groups.
The distribution assessment of shares by value is quite interesting as the situation here remains practically the same. The division of families by groups was proportional so one could expect that richer consumers would spend more on beer by buying more expensive brands. However, share by value perceivably exceeds share by volume only in the families’ group with very high income per capita. This may mean that according to the estimated data, the structure of beer consumers by price does not change much till the income reaches 13 500 rub. per capita (the range from “low” to “middle+” income level).
As RLMS surveys are general by character, and we are particularly interested in beer consumption, we should select homogeneous “core” of consumers and find out their preferences.
Further the following main group will be studied:
- those who have drunk beer within this month;
- aged 20-59 years;
- those who live in urban Russia (region center or city)* .
* dwellers of small populated areas are excluded from the sampling in order to increase the adequacy of analysis as their statistical data differ considerably comparing to city population
The “core” numbers about 39% of all consumers and 54% of all beer drunk in Russia, calculated on the basis of survey stage 2010/2011. The most important tendency for the consumption “core” is growing of the share of regularly and rarely drinking “beer lovers”, at the account of share reduction of “beer lovers” and “moderate” consumers who drink it frequently.
In RLMS questions concerning places of consumption alcoholic drinks are not divided by kinds. However, beer was included and besides, now it officially belongs to alcoholic drinks, so we should assess the preference statistics in this perspective.
Russians prefer to consume alcoholic drinks at home – this location was chosen by …% of all consumers and …% of “core” representatives. Other people’s places are a little bit less preferred (…% and …% accordingly). The … by preference place is a bar or a restaurant. It is interesting that here the data of Russia and “core” differ much (…% and …%). Besides, men aged 20-49 living in urban areas drink in parks, streets or entrance halls more often than the average (…% against …% in all Russia). At work alcoholic drinks are consumed rather seldom – only …% of positive answers.
Choice of consumption location is much dependent on a person’s age. Furthermore we are going to consider not the “core” of consumers but Russia in general in order not to restrict age limits.
Young people under 20 unlike all the rest age categories do not find their own home to be the best place for alcohol consumption; they prefer to do it at other people’s homes. This “anomaly” is obviously connected to the control on the part of adults. However after the age of 30 home becomes the main location for alcohol consumption. People of mean age are the least inclined to drink at other people’s places. Drinking alcohol in bars and restaurants is mostly preferred by young people. At mean age the interest for such establishments starts falling rapidly and elderly people practically do not attend them. In parks, streets and entrance halls alcoholic drinks are mainly consumed by young people – almost … of respondents under 20, but as they grow older the interest to street consumption style weakens quickly. At work alcohol is mostly drunk (though quite rarely) by mean age people.
The choice of consumption location depending on the assessment of one’s own financial state is interesting for two preferred location types. Thus, there is quite a strong correlation – as the financial prosperity grows people more often prefer to consume alcohol at bars and restaurants. Thus, HoReCa establishment choice and its role as sales channel in the first place depends on affordability index of beer at the establishment (beer price/consumer’s income). At other people’s places alcohol drinks are consumed mainly by not very rich people, but in quite a wide span of self assessment the dependency remains practically the same. And rather wealthy people less often drink beer on a visit.
The character of beer consumption has a big impact on location choice. Heavy consumers are more than other consumers inclined to drink alcohol at home. Besides the smaller one-time rate is, the more frequently a person drinks on a visit. On the other hand, those who often drink beer, like to go to parties too.
Popularity growth of “street” consumption type clearly correlates with growing rate and frequency of consumption. A more cultured bar and restaurant consumption type does not vary much for the “core” of beer drinkers. But for Russia in general there is a dependency, namely the bigger the consumption rate is, the more frequently a person attends bars and restaurants. Habit of drinking alcoholic drinks at work or school belongs to those who drink often. Besides there is different dependency on consumption rate for the “core” and Russia in general.
Distribution of the consumer core shares depending on the place of purchase allows revealing several tendencies.
Consumers drinking beer often will be less frequently buying it in kiosks if the consumption rate is increasing. Heavy consumers more often than others buy beer at self service shops (network and non-network). Thus, bans against selling beer in street outlets are likely to mostly affect consumers drinking beer rarely. So, we can expect the bans to influence volumes of beer consumption in general not so dramatic, as the influence on beer consumers’ number.
At the same time, light and rarely drinking consumers purchase at all types of outlets more often than other groups, that is why it is easier for them to adjust to other beer outlets.
Although, bigger consumption rates lead to higher expenses, the level of prices is less important for the consumers who drink more beer at one time. Accordingly, steady growth of beer prices though being very important, to a smaller degree influences heavier consumers who actually drink the bulk volumes of beer.
As frequency of beer consumption is growing, a wide range of this product is losing its significance. While among rarely drinking consumers the product range is important for almost …%, among those who drink it often it is important for only …% of consumers. Thus, the consumers who frequently drink beer will to a smaller degree be affected by product range reduction resulting from restrictions on sale of beer stronger than 5%.
Quality, freshness and naturalness of products are not less important than the price level. This leads to growing love of Russian consumers to such beer characterized as “live”, “fresh” and “brewed at a minibrewery”. There is no obvious correlation between the significance of this criterion and the consumption character. Higher figures of frequently drinking beer consumers can be connected to small size of sampling (as well as the importance of an outlet situated nearby).
Convenient working hours of an outlet is not so important for consumers who drink bigger amounts of beer.
The primary occupation influences the frequency and rate of beer consumption. Here we should note that the “core” of beer consumers aged 20-59 does not include some students and pensioners, which affects our estimations.
About …% of “core” consumers are employed at enterprises, are entrepreneurs or engaged in any other business, …% are unemployed. For reference, in Russia …% of population are employed or own a business, the rest live on pension, keep the house or look after children etc. Thus, the “core” representatives are mainly people who provide for themselves and their families.
Interestingly, in the group of unemployed “core” beer consumers the share of frequently drinking is bigger (at the account of regularly drinking ones). Among unemployed consumers there are comparatively few “light” ones and a lot of “heavy” consumers. Entrepreneurs’ consumption estimation can be distorted due to small sampling, but there we observe consumption rate polarization, namely, the share of lightly drinking and beer lovers are increased at the account of moderately drinking consumers.
The biggest group of beer consumers among the employed includes workers and technical workers such as plumbers, mechanics, assemblers, electricians, painters and many other specialists without higher education who carry out skilled physical work. High share of this group (…%) is connected to its general size and consumers’ core domination. As reference, the share of workers and technical workers among all working Russians (including both those who have and have not drunk beer this month) equals …%. If we compare the beer consumption character to the average for “core” then we will see the full identity in the average consumption rate and a considerably higher frequency.
The second biggest group of consumers includes drivers of freight, auto, public and other transport. Again in this group we observe domination of active consumers’ “core”. Drivers drink beer less frequently, but in bigger volumes, which is obviously connected to their job specificity.
Nearly the same by size group is unqualified workers (watchmen, loaders, forwarders, cloakroom attendants etc). This group is characterized by heavier consumption rate as well as by higher frequency as compared to the average “core” consumers.
Group “state employees” includes people with quite inhomogeneous professions such as a postman and the police officer who due to small respondents’ number cannot be divided into separate groups. State employees cannot be considered big beer fans as the consumption volume is comparatively small. But it is notable that the share of “heavy” consumers is the biggest in this group at the account of reduction of moderate consumers’ number. The frequency of beer consumption here is much lower than the average.
The group “equipment operator” is characterized by comparatively high number of beer consumers. Besides, this group is composed of active consumers, as this group is notable for high frequency and bigger rate consumed at a time.
Engineers and technical specialists with higher education make up a group almost equal by size. There are no peculiarities in beer consumption regularity, and one-time consumption rate tends to be lighter than the average.
Builders like beer much more than people of any other professions. At least the share of beer lovers among them is the highest. The frequency of their beer consumption does not differ much from the average and the rate gravitates toward “moderate” at the expense of “light” consumers and “lovers”.
Among managers of all ranks there are not many beer consumers and the share of those who drink beer often is even smaller. Accordingly in this group the share of those who drink beer regularly and rarely is large. Polarization is seen when assessing the consumption rate, namely the number of moderate consumers is comparatively small but there are relatively many light and heavy consumers.
Lawyer, economists, HR specialists and other similar profession drink beer comparatively rarely, which can be explained by big proportion of women in this group. The character of consumption here strongly gravitates toward reduction of frequency and rate of consumption.
Creative workers compose a small group of people who almost do not drink beer at all. Both the rate and frequency of beer consumption of creative people are considerably lower than the “core” average
There is a rather clear dependence between the level of life satisfaction and beer consumption frequency. The more frequent a “core” representative buys beer, the more likely he is to be dissatisfied with everything or something in his life. There is a … of such consumers among rarely drinking, and about … among frequently drinking ones. At the same time we cannot say that there is a connection between life satisfaction and one-time consumption rate.
Interestingly, financial welfare has a converse effect on the frequency of beer consumption. Among consumers drinking beer frequently, almost a … are optimistic about their future, and among those who drink beer rarely only a … is more or less sure that they will manage to provide for their needs in the nearest future.
We have not found a clear connection between beer consumption character and consumers’ assessment of their welfare, besides, there is no clear dependence frequency/rate on assessment of one’s own power (or rights violation). At the same time the groups of “frequently” drinking and “heavy” consumers are more inclined to consider themselves not respected.
We should also note one more not a very positive trait of “heavy” consumers and those who drink beer often, namely a big share of reserved and insincere people. While among rarely drinking beer consumers there were …% of such respondents according to interviewers, this group reached …% among those who drink beer frequently. Besides, while reserved and insincere people comprised …% of “light” consumers, they comprised …% among heavy ones.
Frequently drinking beer consumers are less inclined to make a compromise with older generation – only … of them believe in possibility of understanding and cooperation between generations. To some degree (but not completely) this correlation can be explained with the fact that beer is frequently drunk by young people who are usually not disposed to conformism.
Beer consumption and marital state are rather clearly connected. Growth of frequency/rate means lower probability that a man is married. The most characteristic are the following correlations the more frequency and consumption rate of beer (as well as other spirits) are, the higher statistics of divorces can be observed; among heavy male consumers the percentage of men who have never been married or are married for the second time, is very high.
Due to the ban against beer advertisement of the media a question on perspectives of alternative channel, namely Internet. In general, about …% of beer consumers (males, urban Russia, aged 20-59) use the Internet at home. The share of the Internet users falls proportionally to beer consumption frequency growth, but is still very high. There is the smallest number of the Internet users among light and heavy consumers, though it remains high too (>…%).
There is a stereotype that active beer consumers are normally overweight people. This correlation can really be observed, but only within not a big group of “heavy” consumers, whose doses of beer and snacks are reflected on body weight. But there is no significant difference between this group and consumers with smaller consumption rate. Consumers who frequently drink beer have smaller body weight, but here young age of the group plays its role.
Physical activity and beer consumption character are connected in quite expected manner. As frequency and rate of beer consumption grow, consumers are less inclined to practice physical exercise. However, against the background of common negligence of physical exercise by Russians, this difference is not prominent.
The assessment of their own health state of light and heavy consumers who drink beer frequently differs negatively. Consumers who drink beer rarely and regularly as well as moderate consumers gave the best assessment of their health state. Certainly, these assessments are in the first place connected to age as health in young consumers who drink more beer and more frequently is better than older generation.
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