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Canadian Brewers Missing Out on World’s Most Lucrative Market

As more craft brewers come online in Canada, and Canadians continue to reduce their beer consumption, many local beer markets are becoming increasingly saturated. Interprovincial and US markets likewise have very competitive environments for high-quality craft beer. For Canadian brewers to continue to grow, they will need to look to other markets. And there is one, bigger than any other, that is largely untapped by Canadian brewers: Chinese e-commerce.

Valued at nearly $18 trillion, the Chinese market is the second largest in the world. With 842 million Chinese people shopping online, China also has the largest e-commerce market globally, generating over 52 percent of the world's transactions, more than North America's and Europe's combined. And this growth shows no signs of slowing down any time soon.

“China's e-commerce sales are expected to be 52 percent of the country's more than $6 trillion in retail sales, making it the first country in the world ever to have more online sales than traditional retail sales,” says Calvin Xiao, founder of Catalystx, a Canadian international marketing management firm specializing in Canadian to Chinese e-commerce trade.

So far in 2022, Chinese people have spent over $130 billion US on beer consumption and represent 12 percent of the world’s beer market. China is also one of the few places in the world where the beer market is growing fairly rapidly at 5 percent annually, and the most likely place the Chinese consumer will make that purchase is online.

“Chinese consumers are very tech-savvy, and 55 percent of Chinese alcohol consumers are ordering online,” says Xiao.

With the development of the Chinese economy and improving living standards, Chinese consumers’ purchasing habits are dramatically changing as younger generations search for products with a unique taste, high quality, and freshness. Canadian craft beer fits this profile perfectly.

This younger generation is quickly becoming a primary purchasing group and represents more than 65 percent of beer purchases in China. And these young people are willing to pay for quality, uniqueness, and freshness. Things Canadian craft beer has in droves.

“A recent poll showed that more than 74 percent of Chinese consumers are willing to pay for craft beer at a higher price,” says Xiao. “And more than 57 percent say they are willing to pay 25 percent more than the regular price and nearly 17 percent are willing to pay 50 percent more. That’s a phenomenal opportunity for Canadian craft brewers.”

Unfortunately, most Canadian beer manufacturers - having focused largely on local markets - are a long way away from being export-ready.

“Canadian beer exports aren’t well-developed and remain exclusively US-dependent,” says Xiao. “In 2021, Canada had 1,876 beverage and tobacco product manufacturing, less than 15 percent of those manufacturers were export-ready establishments.”

But, with the right support, Canadian brewers can dip their toes into international trade through Chinese e-commerce relatively easily.

As the craft brewing industry in Canada has grown, so has the global recognition of Canadian beer. Canada has a reputation for some of the best barley in the world, clean air and fresh water, a friendly business environment and political stability. Plus, China is Canada’s second-largest export partner and the process for e-commerce trade in China has become highly effective and accessible.

“The time for Canadian brewers to become export-ready and enter the Chinese e-commerce market is now,” says Xiao. “Cross-border e-commerce transactions in China reached $261 billion in 2020. So, the process has become effective and efficient for international trade.”

Canadian breweries that enter the Chinese e-commerce market today benefit from streamlined Chinese customs procedures, improvements in delivery methods, policies that allow direct-to-consumer cross-border transactions and exemptions of certain goods from registration, Chinese labelling, and testing requirements.

In short, cross-border e-commerce channels now provide unprecedented access to markets across China. Last year, the value of Canada’s beer exports was CA$129 million dollars, which counted for less than 9.8% of the beverage and tobacco manufacturing exports. Canadian craft brewers could grow these exports significantly.

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