Macau Discovers Craft Beer

The potential for the success of craft beer is growing in Macau as consumers are gradually learning more about these artisanal beverages. Despite the popularity of beer in the city, consumption is mostly limited to major brands, and only a small percentage of drinkers venture further into the world of craft beers.
In order for the popularity of these beverages to expand, the city needs time to spread the culture of drinking craft beer says Angel Chan, co-owner of Agora Bar, a local lounge bar serving craft beers in Macau.
Angel partnered up with Michael So in December of 2014 to open the bar, becoming one of the first bars in Macau dedicated to the sale of craft beers from around the world.
Chan noticed that there were increasing numbers of people in the city who liked to give different types of imported craft beers a try, leading her to open a craft beer bar in Macau and explore the city’s potential.
The craft beer scene is more popular and has a much more mature market overseas, however part of that market has spread over to the SAR, with three primary places currently selling craft beers in Macau – Beer Pro, Beer Temple and Agora.
Beer Pro is a local retail shop run by three partners – Jordan Cheong, Victor Leng and Ken Lio – located on Rua do Comandante Joao Belo. The shop opened in September 2015 when the three seized on the craft beer movement and decided to put their own spin on it.
“There were not many different types of craft beers available in Macau before, so we wanted to introduce a wide variety of craft beer to locals,” Mr. Cheong tells Business Daily.
Beer Temple, operated by Number 81 Co. Ltd – a local company also working on the development of various arts and creative shops in the city – opened in January of this year.
“Local people are interested in drinking craft beers as they’ve found the taste of craft beer is more versatile compared to mass produced beer,” Duarte Silvério, project director of Number 81 Co., Ltd at Beer Temple tells Business Daily.
Mr. Silvério says that more than 50 per cent of their customers come back to buy craft beer after trying it for the first time.
Difference in taste
Craft beer is made in smaller runs and as such, on average, craft beer retailers rotate to a new craft beer every two weeks, allowing for increased and differing offerings on a regular basis.
In addition, the brewing time for mass-produced beer takes about one week, as compared to craft beer, which is brewed over a longer period, ranging from one month up to one year. As a result, each type of craft beer has its own unique flavor, which suits different tastes, thus catering to a wider range of beer drinkers.
One of the immediate distinguishing differences between craft and mass beer are the flavours produced by the ingredients used, such as the water and malt.
“The difference between craft beer and mass produced beer is the taste and the ingredients, as different countries have their unique flavors of craft beer,” Chan explains.
Promoting drinking culture
To increase awareness of craft beers in Macau, these craft beer sellers regularly try to offer various promotional events and co-operate with organizations.
“We are not afraid of competition here as we want more people to know about the culture of craft beer by promoting it through co-operation agreements with other cafés and bars in the city, so there will be more people talking about it and then drinking it,” Mr. Cheong from Beer Pro explains.
Cheong and partners’ shop offers a monthly home brewing workshop to educate the public about various types of craft beers and teach them how to make their own craft beer at home. The shop also works in concert with other cafes, bars and companies to run workshops and team building activities related to craft beer to help boost awareness.
Beer Temple takes a similar approach in its awareness campaigns; it held a craft beer tasting workshop in April partnering with craft beer suppliers from Hong Kong. The owners plan to hold more events – such as seminars and workshops – to further promote their products.
“Running workshops and events to promote craft beer is very effective,” Mr. Silvério says.
By coupling drinking craft beers with other activities, the consumption and entertainment value have made for good results, notes Silvério, stating that a recent performance by a local live jazz band combined with a beer tasting seminar attracted about 100 attendees.
However, as part of the group’s overall strategy, they can’t limit themselves only to individual events and seminars, and therefore they also supply imported craft beers to local eateries.
From an overall perspective, the craft beer vendors have relied heavily on social media channels such as Facebook and WeChat to promote their products and venues, and given the seasonality of the beer business, the three groups particularly concentrate on festival seasons and public holidays to target the maximum number of clients. However, with the slowdown in the economy, the subsequent impact on the food and beverage industry has also trickled down to the craft beer industry, with less money being spent than previously. To combat this, the vendors have been increasing their promotional events and offerings to try to jumpstart consumption.
Paying for quality
Chan from Agora Bar notes that in terms of consumer demographics, young people in the SAR are more receptive to trying craft beers, with average spending of around MOP100 (US$ 12.5) for two to three bottles of craft beer per purchase.
“In the beginning, customers found craft beer expensive, but they would still pay for the taste and quality of it,” Chan says.
Prices for a bottle of craft beer cover a wide range – from about MOP40 to MOP280 – with an average selling price of MOP35.
The main concerns facing vendors of craft beer are the same as most SMEs in the city; with land at a premium, rents take up the majority of their profit margins. Also, additional freight costs to transport the craft beers to the territory from overseas, make the beers more expensive when compared to other more mature markets such as Hong Kong, Chan notes.
Beer Temple’s Silvério has noticed that the shop has regular customers from its surrounding neighborhood, with about 50 per cent of the clientele being expats ranging from 25 to 45 years of age.
Beer Temple and Beer Pro sell around 100 different types of craft beer, while Agora sells about 50 types.
According to the owners of the three craft beer enterprises, the most popular types of craft beers are India Pale Ale (IPA) and Belgian White Ales, while cider is also a popular choice so far.
Staying ahead
In-house staff training is another key element for successfully marketing craft beer directly to customers, note the vendors.
“We try all the new craft beers before we sell them to our customers because we need to ask them what flavor they would like from a bottle of craft beer,” notes Silvério, “meaning that the first craft beer served to our customer is very essential,” he adds.
At a certain point in time, Ms. Chan noticed that the craft beer sold in Macau was all served in bottles, because it was easier for retailers to import the product from overseas. Chan realized that in order to stay competitive in the industry she needed to sell something that her competitors did not have. Thus, she decided to sell on-tap craft beer in Macau, seizing the first-mover advantage.
“We invested in a new on-tap beer system in our new lounge bar. We consistently upgrade our professional knowledge of craft beer as we want to make people think of Agora as a place to have craft beer in Macau,” Chan says.
However, the shelf life of bottled craft beer is around two years, whereas a barrel of on-tap beer can only last for one to two weeks. With the mark-up price, draught craft beer is about 20 per cent more expensive than bottled beer, increasing selling prices to anywhere from MOP68 to MOP85 for a standard glass of 330ml or 500ml.
Expansion seems to be on the horizon for the industry, despite the difficult margins, as demonstrated by the opening of Agora’s newest branch, which offers around 20 different types of draught craft beer, and is located on Rua de Madrid in NAPE. Number 81 Co., Ltd also opened a new branch of its Beer Temple recently – next to Hencredible, a local fried chicken eatery, also run by the same company – located on Rua de Nossa Senhora do Amparo, near the Ruins of St. Paul’s. The group is aiming to mostly target the tourist market and expand its operations.
Mr. Silvério says that people prefer to drink cold craft beer with food at the same time.
No local brewery yet
One major issue of setting up a local brewery in Macau is that it requires a sizable place to produce locally made craft beer. Other technical issues include the know-how in formulating unique recipes.
However, the business owners say that there is no need to set up a local brewery in Macau just yet, as the demand is still not high enough.
“As the craft beer market is still developing in the city, no one has yet opened a local brewery at this stage, but I believe in the future there will be one for sure in about one or two year’s time,” Mr.
Silvério stresses.
Mr. Cheong explains that running a local brewery requires consistency in the ingredients used – such as water, hops, malt and yeast – to formulate recipes for different tastes, as well as label design on bottles and human resources.
Location matters
The three owners of the craft beer shops say that local districts are suitable places to sell craft beer, as locals prefer to go to bars in quiet locations to relax over beer.
“We’ve found that people like to come here to relax and socialize with their friends over a beer,” Mr. Cheong says.
Ms. Chan says that the location chosen for Agora was based on its proximity to many nearby eateries and residential apartments.
Mr. Silvério says that having a location in a local district is advantageous for Beer Temple as it can cater to people with family members from the nearby St. Lazarus district. Occasionally, it holds live music concerts and art exhibitions for people to enjoy.
“Office workers like to find a place where they can relax and be outdoors at the same time after work – which is hard to find in Macau nowadays,” Mr. Silvério says.
Future direction
Beer Pro plans to further expand its business operations by working with corporate companies to run beer-tasting events, Mr. Cheong reveals. He has found that hosting craft beer making workshops is an effective way to market his products and to educate people about the history of craft beer and promote its consumption.
In addition, road shows – offering free craft beers to taste – and setting up online ordering websites for people to order craft beers in larger quantities, are other ideas Cheong hopes to follow through with by the end of this year.
Moreover, Agora plans to open its own local brewery after the operation of its new branch has become more stable – also by the end of this year.