At what percent is the Chinese economy growing?
Now, after decades of robust growth, beer volumes in China are slumping and turning a profit is set to get even tougher.
Beer consumption, which had grown at more than 6% a year on average over the past decade, was flat last year, according to data from U.K. beer-research firm Plato Logic. Beer executives blame the drop on a range of temporary factors like the economic slowdown and two unusually cool summers.
But analysts worry the slump could be longer-term as China’s population ages and per capita consumption declines. Deutsche Bank predicts beer volumes in China could fall by as much as 2.6% a year.
Some of this decline stems from competition from other drinks, but you would think China is poor enough that millions would still be “climbing into” the beer market. And how quickly can those other drinks be gaining in popularity? For further background, here is Christopher Balding on Chinese retail sales:
If we look at the year to date YOY sales of the top 50 retail enterprises, total retail sales grows by 0.9%. In fact, only one category grows by more than 3%, jewelry which grew at only 4.2%.
A simple hypothesis is that Chinese economic output is also growing at about 0.9%.