Is China the next craft beer powerhouse?

In the world's largest beer market, can craft beer catch on?

The thirst for craft beer has made its way to  Germany France Mexico , and other markets around the world. But can it tap into the world's largest beer market, China?

On the surface China's craft beer market isn't all that impressive. According to Ratebeer.com, China has about 30 microbreweries and brew pubs. And the recently formed China Craft Brewers Association has only five member breweries. That's tiny compared to the craft brewing industry in the United States, which currently has 2,360 craft breweries and saw sales double from 2007 to 2012.

And while China is consuming more than 50 billion liters of beer a year (the most in the world), four major beer producers -- SABMiller, A-B Inbev, Tsingtao, and Beijing Yanjing Brewery -- account for about 60 percent of the market.

Even so, it would be wise not to overlook China's craft beer industry. Why? A growing middle class.

"With continued rapid rises in average incomes and the general feel-good factor about China’s continued economic growth, consumers are not only drinking more beer, but are also beginning to drink more expensive beers," said Matthew Crabbe, Director of China Research at research firm Mintel, about a report on China's beer market last year. "Consumer confidence has also translated into more people going out to eat, and this caused catering sales to continue to see an increase in significance to overall beer sales compared with retail sales"

That's good news for craft brewers like Carl Setzer -- a Cleveland native who is the co-founder of Great Leap Brewing in Beijing -- looking to sell their product for 25 to 50 yuan compared to as little as 1.87 yuan for cheaper beer from larger producers.

The Asia Society caught up with Setzer in a fantastic interview on not only craft beer in China but also doing successful business there. Here are a few highlights.

On the success of his product:

Since we opened our doors we've aimed to convince Chinese drinkers that China can be the source of great beers that are made in China, with Chinese ingredients and using Chinese equipment. This is a long process, but once you win that market the scalability is monumental in its potential.

On the growing popularity of craft beer in China:

When we first started we saw an overwhelming customer base from expat drinkers, but entering our third year, and the opening of our flagship brewpub in the San Li Tun area, we see that 60% of our drinkers are now Chinese.

On the emergence of "good beer" in China:

Once you start seeing professional brewpubs with clean, logical designs that produce a healthy and contamination-free product, that is when you can say that craft beer is truly "taking off," because after all, there is only good beer and bad beer.

On doing business in China:

The biggest piece of advice would be to study Chinese earnestly before you go into business in China. ... There is no magical way to do business in China. There is only case-by-case experience and know-how.

Read more: Asia Society [Via The Atlantic]

Photos: Flickr/Liz Phung and Charles Haynes

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This post was originally published on Smartplanet.com

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