In the transcript of the "Marketing Made in China" podcast episode 32, various topics and challenges are discussed that companies face when entering the Chinese market and establishing a brand in the alcoholic beverages sector. Here are some key questions and answers from the transcript, providing a comprehensive overview of the discussed content:

How can German brands be successful in China?

• Felix Wendland shares his experience with launching a Bavarian beer brand in China, emphasizing the importance of a business trip to China as a key event. The realization that Bavarian beer is well-known and popular in China led to the adjustment of the business model, including the establishment of a subsidiary in China with a German brewmaster on-site.
• "Basically our contract brewery," explains the industrial engineer. "Since November 2015, we have been reviewing offers in China and reached an agreement with a brewery in Shanghai in March 2016. This was followed by the establishment of a Chinese subsidiary with six employees, including a German brewmaster who oversees production. The CEO is Felix Wendland. And this Felix Wendland from the report in the Münchner Mehrkur is our guest on the podcast today. And we warmly welcome him. Hello Felix. Hello Thomas. Hello Damian. Pleased to meet you. Where are you joining us from? I am currently south of Munich at Lake Starnberg and am now connected because I flew out of the lockdown in Shanghai a few days ago, or now it's been two weeks, to at least enjoy freedom in Germany for two weeks. In a few days, I'll be heading back to Shanghai for the team."

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What are the challenges of selling beer in China?

• Wendland describes the logistical challenges of importing beer into China that affect the taste of the beer and the decision to brew in China instead to maintain product quality.

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‍How has the product offering adapted?

• Initially, the company focused on beer according to the German purity law. Due to market feedback, however, the offering was expanded to include beer mixed drinks, which now account for 90% of sales.
• "The Chinese consumer market is very huge, but therefore also highly competitive. We know this from cosmetics and personal care and household products in our company, but it is probably similar with beer. So what is your niche or USP? The Chinese beer market is indeed the largest beer market worldwide, is dominated heavily by the big beer conglomerates like AB Inber, Feineken, Carlsberg, or also the Chinese big breweries like Qingdao and Snow. But also many German breweries like Paulaner have been active in this market very early. Paulaner especially with the brewery guesthouses, which were also a model for all these craft beer pubs that now exist in China, in part were and are. We fundamentally position ourselves in China with two product categories."
• "We started with very classic beer, brewed according to the German purity law. That is, we use no chemicals in our products, but really only malt, hops, yeast, and water. We position ourselves very strongly with our German DNA. The German purity law is one of the oldest, if not the oldest food law or food regulation. We try to market our product very strongly through the quality and the refreshment of the beer. Since 2019, we have also included beer mix drinks in our product portfolio, comparable to a shandy. So, a lager beer mixed with lemonade. Now in eight flavors, two of them sugar-free. This product category of beer mix drinks now makes up 90 percent of our sales. This was also one of the first learnings we had in the Chinese market, that one must be willing to engage with the market very strongly and adapt one's products and strategy as necessary to local tastes."
• "This then had to do with fruit flavors and the sweetness that the fruits bring into the beer and on the other side also the alcohol content. When you look at Chinese beers, especially Qingdao and Snow, then we are talking about beers that move between 2.5 and 4 percent alcohol and not as much as now one is used to in Munich or in Bavaria in general, beers that have over 5 percent alcohol. So this was also very important for us, that with the beer mix drinks we had a product that goes very much into the low alcohol area, so everything under 2.5 percent alcohol and brings these fruit notes and sweetness. That means, this is probably also your secret to compete against the established brands that you just mentioned, like Paulaner or Erdinger, who have huge German restaurants with beer gardens here, which are also in the market with huge budgets."

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What distribution and marketing strategies were pursued?

• The strategy included a strong presence in bars, restaurants, and at craft beer festivals to get direct feedback from consumers and anchor the brand locally. Additionally, the team was primarily Chinese to overcome cultural and language barriers and better address the market.
• "So for our purity laws, it is still very important that we highlight our German heritage a bit. We have a brewing tradition that goes back to the year 1688 in Brand. So the brand Brander Urstuf really existed. It is not an invented fantasy brand, as some exist in China, but it is a traditional brand that used to exist in Germany and is now focused exclusively on the Chinese market."
• "And there it is important that we communicate that. So for the purity law beers, that we still brew according to the purity law, that our raw materials come from Germany, apart from the water. We, of course, have that locally at our brewery. But we also market it like that. We show it with the certificates, that our hops and our malt come from Europe or from Germany and present ourselves in a certain way as a German-Chinese company. For our beer pops, as we call our beer mix drinks, it is somewhat different. There, our German DNA is not as much in the foreground, but we advertise that a shandy is basically also a product with a certain tradition in Germany. But we try very much to reflect the Chinese view of consumers again. We also decided at that time to keep the complete marketing for the beer pops in Chinese. We have now translated the Chinese back into English because we do have some experts who are interested in the products. But also 90 percent of our sales are realized with these products and we try to sell to Chinese consumers to 99 percent."

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How were challenges during the COVID-19 pandemic overcome?

• Despite lockdowns, the company used the situation to gain new customers through group orders directly in residential complexes and adapt to changed consumer habits.

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What learnings were drawn from experiences?

• Flexibility in the product offering, the importance of local production facilities for quality control, and the need to quickly adapt to market changes were key insights. Aligning with Chinese consumer taste and adjusting marketing strategies were crucial for success in the Chinese market.
• "That's a very exciting development that you've laid out in China in recent years. And for me, there's always the odd Brander beer with various flavors, sometimes a shandy, as we call it in German, and sometimes just a decent pilsner. So you're doing a lot, doing a lot well. We're pleased to see more of it in the future. But what are your future plans for the coming years? Will you continue to strive for independence, or are you open to relevant exit talks with international or maybe also Chinese companies? We keep all options open in principle. We naturally want to continue to build up the company ourselves because it's just super fun to see how the brand is built. That means a short-term and 100-percent exit is certainly not on our agenda. We want to find a big partner, ideally from China. But we are also not opposed to working with international players."
• "For us, currently, the distribution of the products is in the foreground. That means any investment we make goes into distribution and marketing. We are of course trying very strongly to go to these Tier 1 and Tier 2 cities again. Also coming out of the lockdown with these compound sales. That's also an ideal means that one can continue after a lockdown or hopefully also after the pandemic. Therefore, we are very open to everything. We naturally like the independence as entrepreneurs. But now if a big partner comes who says he can take our company to the next level, we would of course not close ourselves off to a discussion. Well, we wish you much success and thank you for the insights and wish you a good trip, to you and your family. Hopefully, everything goes well with the trip to Shanghai and you all stay healthy and lively and the business continues to run here in Shanghai at some point."

This summary of key questions and answers provides detailed insights into the strategies and challenges of a German company entering and expanding in China in the alcoholic beverages sector.

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1. Spezifische Geschäftsstrategien und Produktanpassungen:
   1. Wie hat sich die Strategie des Unternehmens entwickelt, um bayerisches Bier in China zu produzieren und zu vermarkten?
   2.   In meiner Rolle als Beobachter der Geschäftsstrategien in China konnte ich feststellen, wie sich die Strategie des Unternehmens zur Produktion und Vermarktung von bayerischem Bier in China entwickelt hat, basierend auf den Diskussionen im Podcast.
   3. Ideenentwicklung und Markterkundung:
   4.   Die Idee, bayerisches Bier in China zu produzieren, entstand ursprünglich aus einer Kombination von persönlichem Interesse und marktwirtschaftlichen Überlegungen. Das Unternehmen erkannte, dass trotz der ökonomischen Dynamik in Bayern die Wachstumsperspektiven nicht ausreichend waren. Eine Geschäftsreise nach China offenbarte die Beliebtheit und das Potenzial von bayerischem Bier im chinesischen Markt, wodurch die vage Idee in einen konkreten Businessplan überführt wurde.
   5. Anpassung an lokale Gegebenheiten:
   6.   Das Unternehmen musste schnell feststellen, dass der Transport von Bier aus Bayern nach China die Qualität des Produkts beeinträchtigte, da es oft drei Monate unterwegs war und dabei starken Temperaturschwankungen ausgesetzt war. Die Lösung fand das Unternehmen in der Gründung einer lokalen Produktionsstätte in China, die genau nach deutschen Braustandards arbeiten sollte. Dies sicherte nicht nur die Produktqualität, sondern optimierte auch die Logistik und reduzierte Kosten.
   7. Partnersuche und Lokalisierung:
   8.   Ein kritischer Schritt war die Auswahl einer vertrauenswürdigen und fähigen lokalen Brauerei, die in der Lage war, das Bier genau nach den vorgegebenen Rezepturen und Qualitätsstandards zu brauen. Nach gründlicher Prüfung verschiedener Angebote entschied sich das Unternehmen für eine Partnerschaft mit einer Brauerei in Shanghai und gründete eine chinesische Tochterfirma. Diese Entscheidung ermöglichte es, das Bier frisch und nach original deutschem Reinheitsgebot herzustellen.
   9. Personal und Überwachung:
   10.   Um die Einhaltung der hohen Qualitätsstandards sicherzustellen, entschied sich das Unternehmen, einen deutschen Braumeister nach China zu entsenden, der die Herstellung vor Ort überwacht. Dies gewährleistete, dass das Produkt authentisch blieb und den Erwartungen der Kunden entsprach.
   11. Vermarktungsstrategie:
   12.   Die Vermarktungsstrategie musste den chinesischen Verbrauchergewohnheiten und Vorlieben angepasst werden. Neben der Betonung der deutschen Qualität und Tradition des Bieres, nutzte das Unternehmen lokale Marketingkanäle und Strategien, um eine breite Kundenbasis in China zu erreichen und anzusprechen.
2. Wie wurde eine lokale Brauerei in China genutzt, um die Produktqualität und Frische des Bieres zu gewährleisten?
3. Auswahl der lokalen Brauerei:

Die Entscheidung, eine lokale Brauerei in China zu nutzen, war durch die Herausforderung motiviert, das Bier so frisch und qualitativ hochwertig wie möglich zu den chinesischen Konsumenten zu bringen. Der Prozess der Auswahl einer geeigneten lokalen Brauerei war gründlich und zielgerichtet. Es wurde eine Brauerei gesucht, die die technischen Fähigkeiten und die Bereitschaft hatte, genau nach den strengen deutschen Braustandards zu produzieren.

2. Übertragung des deutschen Brauwissens:

Ein entscheidender Aspekt war die Übertragung des spezifischen deutschen Brauwissens und der Techniken an die lokale Brauerei. Dies wurde durch die Entsendung eines deutschen Braumeisters nach China erreicht, der die Produktion überwachte und sicherstellte, dass jede Charge des Bieres den definierten Qualitätsstandards entsprach. Diese direkte Aufsicht war entscheidend, um die Integrität des Brauprozesses zu wahren.

3. Anpassung an lokale Bedingungen:

Während die Braurezepte und -methoden streng nach deutschen Standards beibehalten wurden, mussten einige Anpassungen an lokale Bedingungen vorgenommen werden. Dies betraf insbesondere die Beschaffung lokaler Zutaten, abgesehen von spezifischen Importen wie bestimmten Malz- und Hopfensorten aus Deutschland, um die Authentizität zu gewährleisten, während gleichzeitig die Frische durch lokale Beschaffung unterstützt wurde.

4. Qualitätskontrollen und Produkttests:

Regelmäßige Qualitätskontrollen und Produkttests waren integraler Bestandteil des Prozesses. Der deutsche Braumeister führte regelmäßige Tests durch, um sicherzustellen, dass das Bier in Geschmack und Qualität konsistent war und die Erwartungen an ein echtes deutsches Bier erfüllte.

5. Logistische Optimierung:

Durch die Produktion in China konnte das Unternehmen die Logistik erheblich verbessern. Die Herausforderungen des Transports über lange Strecken, die oft zu Qualitätsminderung führen können, wurden minimiert. So konnte das Bier schneller und in frischerem Zustand an Verkaufsstellen und Kunden in ganz China geliefert werden.