HONG KONG: A CRAFT BEER MARKET RISES IN THE EAST

LAURIE GOLDBERG

MANAGING DIRECTOR, AMERICRAFT IMPORTS

americraftimports@gmail.com

+852.9311.3082

HONG KONG

o Special Administrative Region of

the People’s Republic of China

o Population: 7+ million

o 500,000 expatriates; 60,000

Americans

o Official Languages: English,

Chinese

o One of the world's leading

trading and financial centers

o Approximately 13,250 eating

establishments; over 2,000

Western restaurants

~82 million liters (21.7 million gallons) in 2010

ALCOHOL CONSUMPTION

BEER (88%)

WINE (9%)

SPIRITS (2.5%)

OTHER (0.5%)

BEER SALES

OFF-PREMISE VS. ON-PREMISE:

VOLUME 2006-2011 (million liters)

Million

liters

2006 2007 2008 2009 2010 2011

Off-

premise

65.6 64.2 68.9 70.3 72.1 72.8

On-

premise

87.9 88.4 84.2 79.8 80.8 83.5

CRAFT BEER: JUST GETTING STARTED

MACROBREWS: MAJOR MARKET SHARE

Major brands consumed in Hong Kong: Heineken, San Miguel, Blue Girl,

Carlsberg, Budweiser, Tsingtao, Hoegaarden, Asahi, and Guinness.

Hong Kong MARKET SHARE (% by Global Brand Owner)

BRAND 2005 2006 2007 2008 2009 2010

San Miguel Brewery, Inc. -- -- -- -- 36.2 35.7

Jebsen & Co., Ltd. 14.0 15.0 15.9 16.8 17.8 17.8

Carlsberg A/S 12.1 12.9 9.9 9.7 9.7 9.5

Heineken NV 9.4 9.7 9.1 8.9 8.0 8.3

Tsingtao Brewery Co., Ltd 3.5 3.1 4.0 4.2 4.1 3.9

Anheuser-Busch InBev NV -- -- -- 3.4 3.1 3.6

Modelo SA de CV, Grupo 3.2 3.2 3.4 3.3 2.6 2.3

Fujian Huiqian Brewery Group -- -- -- -- -- 1.8

Diageo Plc. 1.6 1.6 1.7 1.7 1.7 1.8

S&P Co. 2.9 2.4 1.9 1.8 1.3 1.3

Beijing Yanjing Brewery Co., Ltd. 6.2 5.6 4.8 4.6 3.3 1.2

SAB Miller Plc. 0.6 0.5 0.6 0.5 0.4 0.4

San Miguel Corp. 30.7 30.5 31.3 31.0 -- --

InBev NV SA 2.9 2.3 2.2 -- -- --

Anheuser-Busch Cos. Inc. 3.0 2.0 1.6 -- -- --

Others 10.0 11.1 13.6 13.0 11.7 12.5

HOWEVER:

o Large, growing segment of affluent

consumers.

o Hong Kong follows US and European

consumption patterns (e.g.,

premiumization).

o Hong Kong buyers of craft beer:

o Status-conscious and affluent;

o 20-35 age segment;

o Asian and Western;

o Concerned with quality brand image.

o More craft beer selections.

o More choice/educational

opportunities.

o Several new craft beer

importers started in 2012.

o Numerous 2012/2013 events

aimed at promoting craft beer:

- International Beer Awards (Sept. 2012)

- Great American BBQ Event (Nov. 2012)

- Beertopia Hong Kong (2013 Date TBD)

- AmCham Events

EMERGING MARKET:

The Globe, a beer bar originally

started in 1995, moved to a larger

location in 2010, and offers an

extensive selection of craft beers

from around the world

What Kind of Establishments Are

Serving Craft Beer?

INCREASED MEDIA ATTENTION

“In a city more

accustomed to wine

(importing it is duty-free)

and baiju (a potent

Chinese liquor often

drunk on special

occasions), a small group

of craft beer devotees is

spreading the word that

not all brews are created

equal”

-- Hana R Alberts

April 2012, BBC TRAVEL

“It's easier than ever

to get top-notch

brews, thanks to a

growing number of

beer bars, importers

and retailers

dedicated to quality”

--Christopher DeWolf

April, 2012

CNN GO

BEERTOPIA 2012

o Hong Kong beer festival held on April 28, 2012

o Featured craft beer tastings and educational lectures on

beer tasting, home brewing, and beer and food pairing

Beertopia, April 2012

BEERTOPIA 2012

o Featured craft beers from

the US, UK, Hong Kong,

Belgium, Japan, Australia,

New Zealand, and Germany

o Event sold out

o Over 1,700 people attended

o International news coverage

o To be an annual event

BENEFITS OF EXPORTING TO

HONG KONG

o Impacts tastes across Greater China

o Slow and steady market growth

o Excellent brand development and marketing

opportunities

“… Brickhouse in Lan Kwai

Fong is packing crowds in

with tacos and beer”

--Discovery Magazine, September 2012

Featuring Lost Coast Brewery’s

Great White

LOGISTICAL & MARKETING

CHALLENGES

o Limited storage space, most bars and restaurants don’t

have cold storage

o Personal relationships key

o Large restaurant groups control entry into many

bars/restaurants

o Exclusive sales contracts

o Service culture differs from the US, and most servers not

knowledgeable about craft beer

o Gray market/parallel imports

HOW CAN YOU OVERCOME THESE

CHALLENGES?

o Work with an importer/distributor who emphasizes quality control, craft beer education and training, and marketing

o Refrigerated containers

o Ship smaller quantities in consolidated containers while your distributor builds your brand

o Work with importer/distributor to identify and prevent gray market/parallel imports.

IMPORT REGULATIONS

o NO TAX on beer being imported

into Hong Kong (tax abolished in

2008)

o No certification requirements

o “Best Before” date must appear on

beers whose alcoholic strength is

between 1.2%-10%

o Compared with China, Hong

Kong’s rules and regulations are

much less onerous

SHIPPING TO HONG KONG

o Transit time from Oakland to Hong

Kong is approximately 3 weeks

o Consolidated 20 foot REEFER from

Oakland to Hong Kong (inclusive of

consolidation costs, documentation

costs, etc.) costs $4,500

BEER PRICING (EXAMPLE)

US Wholesale Price 12 oz. bottles

Price Upon Arrival in Hong Kong

Off-Premise Price (online retail shop)

On-Premise Price

$21/case

$28/case $72/case $184/case

.88/bottle

$1.17/bottle $3/bottle $7.67/bottle

WHERE ARE WE

HEADED?

o Slow, steady growth in craft beer

demand and sales

o Most popular beer styles are

currently wheat beers, fruit

beers, and stouts, with a growing

interest in American-style IPAs

o Current demand is driven by expatriates, but interest

among locals is growing

o Increased interest in craft beer on draught and

brewing craft beer locally

ABOUT AMERICRAFT

o Hong Kong-based importer and distributor of US craft beer founded by Laurie Goldberg, an attorney, beer enthusiast and former resident of Massachusetts, Hawaii, and California

o Mission: To bring the best American craft beer to Hong Kong and to encourage American craft beer appreciation through education, staff training, and events

o Current Portfolio:

• Anchor Brewing: Anchor Steam®; Liberty Ale®; Anchor Porter

• Lost Coast Brewery: Indica IPA; Great White; Tangerine Wheat; Alleycat Amber; Downtown Brown; 8-Ball Stout

• Big Sky Brewing Co.: Big Sky IPA; Moose Drool; Trout Slayer; Scape Goat Pale Ale

• Kona Brewing Co.: Longboard Lager; Wailua Wheat

• Shmaltz Brewing Co.: Hop Manna IPA, Genesis Dry Hopped Session Ale, Bittersweet Lenny’s R.I.P.A., Origin Pomergranate Ale, Coney Island Lager, Mermaid Pilsner