Crafting beer with Chinese characteristics

Thomas Gaestadius shows a small batch of house-roasted barley that will be used in craft beer.BRUNO MAESTRINI

Three years ago, he decided to turn the bar into a serious brewpub with the acquisition of specialized brewing equipment, including containers, boilers and fermentation tanks.

He calculates he invested around $80,000 to make his dream possible. Though still a small business, Zhou estimates that sales of his craft beer have been increasing by at least 30 percent a year.

Zhou, whose best-selling products include his Chinese tea pale ale and a yellow lotus seed and mushroom ale, thinks that the local industry still needs to develop its own identity. "China doesn't have its own reputation for craft beer production in the beer world. We need to try our best to change this," he said.

Despite slight decrease in sales volume in 2015 and 2014, Euromonitor International forecasts that China will see beer sales increase to 49 billion liters in 2016.

Beijing-based market research group Daxue Consulting says the increase will be boosted by sales of premium brand beers, reflecting increasing opportunities to capitalize on the growth of the premium segment.

Even though demand for craft beer is increasing, the segment remains in its infancy, with producers saying that sourcing materials, particularly malts, hops and yeasts, are one of their biggest challenges. But some help appears to be on the way.

In November, the United Kingdom signed a $151 million deal to export 150,000 tons a year of barley to China over the next five years, mostly to tap into the country's appetite for premium beer.

"This indicates that the market is becoming more mature and there is a wider offer of choices for us and for customers," said Will Yorke, co-founder of Arrow Factory Brewing.

Chandler Jurinka, owner of Beijing-based Slow Boat Brewery, says trade deals for beer ingredients are crucial for the nascent industry.

"When we first started doing business, we could barely get anyone interested in selling barley to us," Jurinka said.

Slow Boat opened in 2011 using an investment of $1.3 million raised in part with the help of angel funding from family and friends.

Nowadays, the microbrewery, which has its own taproom in Beijing, ships its beers across China.

Slow Boat now sells 250,000 liters of artisanal beer, having registered a 300 percent year-on-year growth in revenues in 2015.