Author | Hu Shu Editor| Luo Lijuan
How hot is craft beer entrepreneurship?
Shen Rui, a senior media person in the beverage industry, described it this way: "In the past two years, the exhibition of the beverage industry has been full of craft brewing brands that have come to find OEM. ”
Lu Dongliang, director of Qiandao Lake Beer, also felt the same way, he told all-weather technology: "In a year, I have received more than 800 people, and nearly 100 craft brewing brands have come to us for OEM. ”
As the largest established beer brand in Zhejiang Province, Qiandao Lake Beer opened the processing business of craft beer in 2016, and Lu Dongliang obviously felt that the craft brewing industry ushered in the outbreak period of OEM after 2019, and the foundry business has accounted for 20% of the overall business.
For other brands that come to the door to seek OEM, remove the brands that do not meet the production standards and homogenize their products, and Qiandao Lake Beer will eventually accept less than 10% of the orders. Over the years, the variety of beer produced by its factory has reached 348, except for more than 60 beers produced by Qiandao Lake Beer, only about 280 oem brands.
Among them, there are not many craft brewing brands that can adhere to stable orders for 3 years.
"After many brands have been produced at one time, the amount of follow-up requirements has been reduced and no longer meets our minimum production requirements; and many more brands have stopped doing craft brewing and changed careers." Lu Dongliang said.
"The craft brewing track is big and there are many opportunities, but under the monopoly of large enterprises, it is very difficult to succeed."
This is Lu Dongliang's biggest realization in the past 3 years. But even so, there are still a large number of entrepreneurs who come and go.
Enterprise investigation data show that in 2019, 2020 and 2021, the sales volume of craft beer-related enterprises was 278, 414 and 560 respectively, and the "dead brands" increased year by year. However, the new brands have also grown rapidly, and the number of registered craft beer-related enterprises in the past three years has reached 1258, 1683 and 2668 respectively.
On July 9, 2021, the 7th China Craft Beer Festival opened in Nanjing. (Image source: cfp)
Sam, an entrepreneur who has operated a number of fast-selling brands, also entered the craft brewing track in April 2020 and founded Fanbo Craft Brewing. He is very optimistic about the judgment of this track: "The industry has completed the initial reshuffle, passed the embryonic period, the consumer market also has a certain understanding of craft brewing, the market is growing rapidly, craft beer must have many opportunities." ”
However, to find such an opportunity, it is also necessary to break through the blockade of channels by beer giants and the heavy investment without capital support. And most start-up brands have died on the road before they can find a solution.
01 The tide rises and falls
This wave of craft brewing entrepreneurial boom began in 2019 and will be even hotter in 2020 and 2021.
In fact, back in 2017, the craft beer circuit had already undergone a reshuffle.
In China, the development of craft beer is only a decade old. In the early days, it was a group of Chinese people with experience in foreign countries, as well as foreigners working in China, who preferred beer with stronger hops and richer flavor, but in the domestic market with high monopoly of industrial beer, beer products were relatively single, and many people began to brew their own beer.
Then this form developed into a craft brewing bar that blossomed everywhere in first- and second-tier cities, becoming a white-collar lifestyle.
Around 2016 and 2017, capital began to enter the craft beer track, and brands such as boxing cats, zebra craft beer, monkey craft beer, and hops became the "darlings" of capital in this period. Budweiser acquired Boxing Cat in 2017, and in the same year Panda Craft Brewing completed the industry's largest financing of 119 million yuan.
But after that round of investment fever, the enthusiasm of capital quickly cooled. Xiao Hua (pseudonym), a consumer investor who has paid attention to the craft beer track, told All-Weather Technology: "We have discussed in the industry, and we feel that we have basically paid a blank roll after the wave of investment, because the demand has not risen. ”
By 2020, the outbreak of the epidemic has affected the operation of offline bars and catering industries, and entertainment venues such as bars have ushered in a wave of store closures, and many craft brewing brands that adhere to the "small and beautiful" route have not survived the cold winter. In the two years of 2020 and 2021, the sales volume of craft beer-related enterprises will total nearly 1,000.
From another point of view, the industry at this time has undergone a reshuffle and completed the initial integration, and Sam, who is engaged in the fast-selling product entrepreneurship, sees an opportunity, "The entire category has passed the embryonic period and the adjustment period before 2017." At the same time, the consumer market has also been educated in high-end beer.
In the past five years, China's three beer giants Qingdao, Snowflake and Yanjing have vigorously promoted product upgrades, and even the price of industrial beer has risen from single digits to double digits.
"In the past, they mainly sold two or three dollars a bottle of water beer, but now they also make white skin, lager, yellow skin and so on." Shen Rui said, "They are just a little bit of upgrading, making less water, adding a little more hops, not yet to the level of craft brewing, but also going above the waist." ”
This subtle upgrade allows consumers to gradually accept products with a price of more than 10 yuan, and also lays the foundation for consumers to further accept higher-priced craft wines.
Xiao Hua's research found that a big change now is that consumers drink less, but drink more expensive. The development of mid-to-high-end beer is very fast.
According to china research network data, in 2020, China's craft beer sales accounted for only 2.4% of the overall beer market, while industry sources revealed that the industry's compound annual growth rate is 25%. The Prospective Research Institute expects that by 2025, the domestic craft beer market will reach 87.5 billion yuan, with a penetration rate of 11%.
The huge market is in front of us, and it is difficult for both beer giants and entrepreneurs to give up. According to the official disclosure of Tsingtao Beer, it is expected that in the next 3 to 5 years, the proportion of high-end beer products will reach 15% to 20%.
Tsingtao Beer launched a high-end product, the price of up to 1399 bottles
The more important point that has promoted the outbreak of craft beer entrepreneurship lies in the maturity of the industrial chain.
According to Lu Dongliang, the entire Chinese beer market is occupied by 90% of the market by six domestic and foreign giants of Snowflake, Qingdao, Yanjing, Carlsberg, Budweiser and Heineken. With the consolidation of the market by the giants, many former small and medium-sized breweries have overcapacity.
"The factory utilization rate used to be more than 80%, but it has been declining in recent years, about 60% to 70%." Xiao Hua said that this has also prompted many wineries to open OEM business to fill up production capacity.
In the past three years, foundry services in the beer industry have developed rapidly. Taking Qiandao Lake Beer as an example, by 2021, the revenue of the foundry business has accounted for 20% of the overall revenue.
In terms of foundry services, according to Qiandao Lake Beer, there are two ways of cooperation, one is the brand self-developed recipe, renting the equipment of Qiandao Lake beer; the other is that the brand provides ideas, the factory can study and produce, and finally produce, one-stop service.
The all-inclusive service has greatly lowered the technical threshold of craft beer, which has also made more and more laymen eager to try craft beer.
02 The cake is big and unpalatable
Not only is the technical threshold low, but only from the cost of production, the cost of craft beer is not high.
According to Lu Dongliang, the cost of producing craft beer is mainly in three pieces of raw materials, processing and packaging materials, and its proportion is about 5:2:3.
Compared with traditional industrial beer, although the cost of craft beer in terms of raw material consumption and processing is higher, its price is also higher, and the gross profit space in the middle is huge.
Taking Fanbo craft brewing as an example, according to Sam, "the materials and processing fees of Fanbo craft brewing account for only 8% to 12% of the entire finished product shipment price." "Because their raw materials use cell fluid instead of dry feeding, the cost of raw materials can be further reduced, compared with the industry average can be reduced by 40%.
"In fact, once mass-produced, many craft beers can reduce production costs by about half." Sam said.
And what is the average gross profit margin of the craft brewing industry?
A founder of a craft beer brand specializing in retail channels introduced to all-weather technology that the cost price of one of their "German wheat" beers is 2800 yuan per ton, and the cost of 500 ml is only 1.4 yuan, even if the bottles and labels required for the material are added, it is only a cost of more than 2 yuan. But in the market, such a bottle of beer is priced at 19.9 yuan, and the gross profit margin is as high as 80%.
And such "huge profits" have also become the most attractive bait on the craft brewing "big cake", attracting countless entrepreneurs who are chasing profits.
But in fact, although the gross profit of many brands is high, the profit of many brands is not high, or even negative. "Some people sell 9 yuan 9 to make money, and some people can't make money without selling 30 yuan." said the above-mentioned person.
"A niche brand like that, it's not priced at 300% gross margin, it can't do it." The person in charge of a beer foundry revealed, "Because craft brewing is now applauded and not sold, under the premise of not selling well, its fixed cost (including depreciation cost) is very high." "And relatively speaking, craft beers usually have a shorter shelf life than industrial beers.
For example, he explained that taking the amount of 10,000 tons as an example, if brands can sell them all, the gross profit margin of 20% is very good. However, the dematerialization rate of many brands is not high, such as only selling 2,000 tons, and it is even difficult to recover the cost if the price is not raised.
The most critical issue in the middle is whether the channel can be opened and whether the consumer market is willing to pay for the brand.
Due to the "ready-to-drink" nature of the liquor market, offline channels still dominate. The six beer giants have long been firmly in control of the channels to the table and entertainment venues, and it is difficult for craft brewing brands to break out of the siege surrounded by giants.
And the circulation channels they can go through, one is a directly operated bar, and the other is to do retail through convenience stores, supermarkets, and e-commerce.
But craft brewing for retail is not optimistic. "If he doesn't enter the channel of direct operation, first, he can't sell, and second, he can't establish recognition." Go directly to retail, a row of cabinets in a convenience store has any brand, why do others buy it? Xiao Hua said.
"Business is all about a turnaround, a place where you can get a virtuous circle by investing resources." Xiao Hua said, "Some people have found a good channel, and if they cultivate a channel deeply, they will be able to open it." But in shopping malls and convenience stores, this cycle cannot roll. ”
Once the craft brewing products cannot be sold, the entire capital chain is difficult to sustain, and the price of small brands is even more difficult to reduce. In contrast, large brands that have accumulated funds can take the lead in fighting a price war under the advantages of channels and costs.
Taking the Beijing craft brewing brand "Jing A" as an example, in 2019, Carlsberg acquired a small amount of equity in Jing A. Alex, the founder of Beijing A, introduced in a dialogue with all-weather technology that Jing A has four core craft beers processed and produced by Carlsberg's factory and sold through Carlsberg's channels.
Due to the realization of mass production and the use of existing channels, the price of these 4 beers in the official flagship store of Taobao Carlsberg Beer is controlled at about 10 yuan / bottle, which is the same price point as the common high-end beer such as 1664 in the market.
Other brands that can achieve relative "parity" are Boxing Cat, which was acquired by Budweiser, Panda Craft Brew, which has received high financing, and Xuanbo, which has completed three rounds of financing in 2021. Taking Xuanbo as an example, the price of its 330ml craft beer is about 3.9 yuan, which is almost the same as the price of a bottle of industrial beer.
Under the huge price gap, the Matthew effect of craft beer is intensifying, and it is more difficult for start-up brands to develop without strong capital support.
Not only that, but the giants have not yet fully exerted their strength in craft brewing.
"In fact, it is not suitable for large-scale craft brewing now, and the giants dare not rush to push the global products of craft brewing, because this is also a peacekeeper with the original intention of craft brewing," Shen Rui believes, "but they do craft brewing is an easy task."
03 Wait for the solver
In fact, capital's enthusiasm for this track has not surpassed the previous round.
According to Ene Niu data, in the four years from 2018 to 2021, the number of investments was 3, 5, 1 and 11 respectively, and the financing troughs of the industry in 2018, 2019 and 2020 increased in 2021.
Data source Ene cow data, 24/7 scientific and technological mapping
But even if the number of investments has increased, most of the financing is still in the initial stage of the angel round and the A round, in addition to doing low-end craft brewing Xuanbo beer, as well as doing liquor channel cat staff, the investment amount of other brands is not high. Investment institutions are still in the testing stage of small amounts of investment.
In mid-2021, Xiao Hua (pseudonym) participated in an investment in a craft brewing brand. According to him, in the first half of 2021, many VCs have seen the new wine track and expressed interest in craft brewing, but there are not many projects that have been invested in the whole.
According to its introduction, investors' attention to craft brewing has two directions, one direction is to look at the offline space, such as Helens, Erma and other offline chain taverns. Mainly look at the user positioning, business characteristics, urban attributes, etc. of this type of brand, trying to find the next chain of craft wine bar brands that can open hundreds of stores and thousands of stores.
The other direction is the product.
The first is to see if this product has the potential to become a big item. After Xiao Hua inspected, he found that there is no shortage of small and beautiful brands in the craft brewing track, and many brands that have survived from the early development still have their own fixed customer groups, but his consumer group is fixed in the senior enthusiast group of craft beer, and the taste and flavor are difficult to be accepted by the public. And this type of brand is also difficult to commercialize.
Second, look at their solutions to channels. Products sold only in their own bars are difficult to expand due to the limitations of self-operated space; and those who choose supermarkets and convenience stores as starting channels are considered by Xiao Hua to be the "most garbage solution".
What investors want to see more is a channel solution similar to Taishan's original pulp.
It first played the concept of "beer pulp", staggered the direct competition with industrial beer, and took the lead in playing the high-end market. In terms of channels, stores and liquor stations are used to densely lay out near the catering business district, and timely delivery in the form of takeaway, rather than directly entering the retail channel, or going to the catering store to fight directly with the giants.
Relying on this way, Taishan has killed a way to live and released production capacity in the Shandong market where Qingdao and snowflakes are the most fiercely killed. Then continue to expand to the northern market, with the increase of brand influence, it has attracted franchisees, further expanding the market, forming a virtuous circle.
But Tarzan's way doesn't suit most craft beers. Taishan's main pulp and fresh beer is actually an upgrade on industrial beer, and it targets a larger consumer market. And the upfront cost of laying out outlets is too high, and it is not something that craft brewing start-up brands can afford.
Many brands are also trying to give different answers. Taking Beijing A as an example, in addition to the self-operated bar channel, on the one hand, carlsberg channels have been borrowed to roll out 4 core products offline, which have now accounted for half of its annual sales.
On the other hand, it opens the channel of "exclusive supply" and offers wine to bars. In many offline bars in Beijing, you can drink Jing A's barrel beer. Whether such a channel can be opened depends on whether the brand itself has enough recognition in the industry and word of mouth.
"Although investment institutions were also looking at craft brewing last year, they were all looking for more than 80 points, and those below 80 points would not look at it." Xiao Hua said. In his opinion, there are not many brands on the entire track that can reach the level of 80 points.
Witnessing the three years of the craft beer foundry business, Lu Dongliang also sensed that the industry was receding, "I think it will be cooled down from 2022." ”
Among the brands of Qiandao Lake Beer OEM, some brands no longer do craft brewing after testing the water market, and decide to change careers; some brands continue to reduce production after a mass production, and it is difficult to maintain.
According to the "Pioneer State Frontline" report, due to the reduction of orders, factories at the supply chain end have also begun to close. One interviewee said, "Of the 10 factories I saw, 3 or 4 of them were transferred this year, and they couldn't open them at all. ”
However, for the craft brewing track cultivators, the ups and downs will not affect them. Alex, founder of Beijing A, told All-Weather Technology: "Their coming in also let a lot of people know about craft brewing, which is a good influence." ”
In this untapped market, the industry is waiting for a real outbreak, which may be the popularity of a big single product, or the launch of a brand, or the birth of a new channel.
And capital is not really far away, just waiting for a better answer.
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