The past couple of years have taken some of the fizz out of the traditional beer market in China. While the spending power of consumers has been increasing, the volume of beer consumed has been decreasing.

That's still a glass half-full for Angus Or, CEO of Carlsberg China, because Chinese consumers' tastes and preferences are evolving, promising bright prospects for high-end beverages.

The new generation -people born after 1990 - is demanding better products. It follows that the beer market is likely to see rising sales if it begins to introduce innovative varieties.

Carlsberg's Or is convinced future opportunities lie in big cities and in nonalcoholic beers and ciders.

In addition, the increasing popularity of craft beer is a bright spot. Premium quality underlies another strategy that Carlsberg, a Danish brewer, is adopting to improve its performance. It's a strategy that has already produced good results in other markets.

That has become necessary now in China to reverse the downward trend of the last two years. According to the National Bureau of Statistics, about 47 billion liters of beer were produced in 2015 - down more than 5 percent and a five-year low.

Signs are that the situation may not improve much this year. In the first half, about 22.5 billion liters of beer were produced, down 4.3 percent year-on-year.

Carlsberg's response is to acquire major local brands in China and "premiumize" them to meet the demand for high-quality products. It is eyeing beer brands and varieties including Chongqing, Wusu, Dali and Xixia.

"We've also introduced a series of superpremium brands under our Master's Choice portfolio, including imported high-end brews such as Grimbergen from Belgium, Poretti from Italy, and Karhu from Finland. We aim to meet a variety of consumer needs in all categories - mainstream, premium and superpremium - by providing them with the best-tasting products," Or says.

This has helped Carlsberg already, even though the lager beer market is cooling. In the first half of 2016, Carlsberg's operating profits globally and in the Asia region rose 8 percent and 6 percent year-on-year respectively, despite the corresponding volume declines of 1 percent and 4 percent. Clearly, premium beer is driving Carlsberg's sales growth.

Beer market analysts say it's a systematic strategy that requires the coordinated efforts of many teams, from production, packaging and distribution to marketing, branding and consumer education.

Fang Gang, a Beijing-based beer marketing specialist, says: "Consumption of beer is highly associated with how consumers perceive the product as a label of wealth and lifestyle. Two decades ago, beer was regarded as a luxury drink, but as consumers are getting wealthier, now many think it is low-end, or just a very affordable drink in summer.

"If beer brewers want to win the new generation of consumers, they have to make the latter regard beer as a season-neutral, all-year drink for various occasions and scenarios."

Zhang Wutao, a Shanghai-based beer dealer with Maoquan Trade, agreed, saying that premium beers are now consumed more widely than ever - after a tennis session, at rock-and-roll concerts, at beach resorts and at wedding banquets, he says.

"Some beer brewers are offering buyers tailor-made products like souvenir bottles and cans for specific events like town halls or celebrations to mark completion of a project, Zhang says.

For their part, consumers say moving toward premium beer products increases variety and makes drinking exciting.

Zhang says: "When other people are drinking wine or white rice liquor from a crystal glass, you don't want to be seen having a beer poured from a 600-mililiter bottle.

"When beer becomes a premium drink in terms of both quality and price, you have one more option when you drink with other people. Drinking premium beer together could help build rapport, a relationship that is not too casual and not too distant."

(China Daily European Weekly 10/21/2016 page30)