China: Brewing industry resumes production

It’s the first positive industry news with regard to the coronavirus: Chinese breweries that suffered first from the outbreak of the coronavirus are the first to see an end to the crisis.

Xiaohai Hou, CEO of China’s leading brewer China Resources Beer said at an earnings call earlier this week that he expects “to return to normal by May”. This would be much quicker than most of the expert's expectations.

Demand for beer at bars and restaurants has fallen sharply in China during the first two months of this year due to the restrictions on the sale of food and beverage in these outlets in order to limit the spread of the novel coronavirus. CR Beer’s sales fell consequently 26% in January and February and will most likely also fall in March.

However, leading breweries in China are confident to resume sales in April as China have already eased the strict measures which were imposed earlier. On Wednesday, the lockdown in the Hubei province, where the coronavirus outbreak started, was mostly lifted. The ruling communist party and China’s president Xi Jinping have been proclaiming victory to the world over COVID-19 in a “people’s war” and announced to gradually lift the remaining bans in the country.

"If the current situation continues, restaurants will likely resume business in April and can be expected to return to normal by May," Hou said as quoted by Nikkei Asian Review.

The optimistic outlook is supported by importers of bottled beer to China that see again increased demand for their products. A brewery from Germany with a high proportion of exports to Asia that experienced sharp losses during the crisis reported again a strong demand which is currently only limited by the availability of seafreight containers. Since Europe is currently at the peak of the corona crisis the demand for goods from Asia has considerably decreased and less containers than usual are on their way from East to West. This also limits the available containers for shipping goods back to Asia.

It remains to be seen if the first positive signs are not overly optimistic or even a “whistling in the dark”. Several observers including UK government officials believe China is spreading disinformation about the severity of the coronavirus outbreak in its country the Mail on Sunday reports.

However, if true, the western world is most likely to follow the Chinese example with a delay of two to three months and a normal business could be back hopefully right in time for the sales peak in summer in the Northern hemisphere.

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