As the hot summer approaches, consumers have noticed that while the trend of high-end beer is evident, the sales of Baijiu are cooling down.

In China’s consumer market, an intriguing phenomenon is unfolding: on one hand, brands such as Tsingtao Beer and CR Snow have successively launched ultra-premium beer products priced over 1,000 yuan, which have received a warm market response. On the other side, the traditional liquor industry is facing the predicament of declining sales and high inventory.

The booming sales of ultra-premium beers such as Tsingtao Beer’s “Legend of the World” and China Resources Snow Beer’s “Li” form a sharp contrast with the sales predicament faced by major liquor giants like Moutai and Wuliangye. Behind this phenomenon where “beer is getting more and more expensive while liquor is getting harder and harder to sell”, some people point out that Multiple factors such as the generational shift in consumption, scene reconstruction, and the transformation of value perception are reshaping the landscape of China’s alcoholic beverage market.

Is it the transformation of China’s consumer market or has the enterprise’s strategy found the right direction?

Is beer becoming more upscale?

The Chinese beer market is undergoing an unprecedented high-end revolution. At the beginning of 2022, Tsingtao Beer launched a super-premium new product, “Legend of the World”, priced at 1,399 yuan per bottle (1.5 liters), which is approaching the market guidance price of 53-degree 500-milliliter Feitian Maotai. Surprisingly, the sales of this thousand-yuan beer are now quite considerable.

At the earnings briefing, Huang Kexing, the chairman of Tsingtao Brewery, disclosed: “In the first quarter of this year, the sales volume of the company’s three ultra-premium products, namely Century Journey, Century Fortune and One Legend, was nearly 200,000 bottles. Currently, the One Legend product is still in short supply.” This is not an isolated case. As early as the first half of 2021, China Resources Snow Beer launched a super-premium new product called “Li”, priced at 999 yuan per box (2 bottles), with a single bottle price close to 500 yuan. Budweiser is not lagging behind either. It has launched the “Budweiser Master Legend” 798ml Tiger Year Limited Edition beer on e-commerce platforms, with a price as high as 1,588 yuan per bottle.

The concentrated emergence of these ultra-premium beer products marks the strategic transformation of China’s beer industry from a price war to a value war. Since 2018, Tsingtao Beer has raised the prices of its products several times. The prices of draft beer, Classic Beer, white Beer, etc. have increased by 5% to 13% respectively. Subsequently, it has also accelerated the development pace of products such as August, IPA, and Amber Lager. After launching the 1,000-yuan beer, Tsingtao Beer’s strategy of promoting high-end positioning through “price hikes + product structure upgrades” has become a clear strategic move. Snow Beer of China Resources also began its transformation towards the high-end market in 2018, launching a series of mid-to-high-end beer brands such as SuperX, Craftsmanship, and Mars Green. In 2019, it acquired Heineken China, completing its high-end layout.

The confidence of beer enterprises to raise the pricing of their products to the 1,000-yuan range partly stems from the market opportunities brought about by the upgrading of consumption. As the middle-income group in China expands, consumers’ willingness to pay for high-quality products has increased. In its promotion, Tsingtao Beer’s “Legend of a Lifetime” emphasizes “A hundred master brewers, inheriting century-old craftsmanship…” The cultural value of “aged in century-old oak barrels, gathering the fragrances of a hundred flavors, brewing a century-old legend” is recreated by the ancient Chinese recipe for brewing wine with sprouted grains. It selects organic coix seed, organic corn and other ingredients, and adopts a bottle design with the pattern of a double-eared salamander. These products are no longer merely alcoholic beverages; they have become “social currencies” that carry cultural connotations and status symbols.