Brewing beer has long been regarded as one of the most artisanal professions out there. When most other consumer goods and, more specifically, alcoholic beverages producers started to consolidate, with the larger players buying up the small brands, the trend in beer consumption reversed (Kelly, Kopka, Küpper & Moulton, 2018).
In a world where big brands and large-scale products started to become the standard, more and more beer consumers went looking for the smaller, more artisanal beers out there: a craft beer trend was born (Furnari, 2019). With consumer preferences diverging, how do you brew the craft beer that appeals to the highest number of consumers? That is exactly the question one AB InBev’s Chinese subsidiaries, Boxing Cat Brewery, was asking itself as well.

In 2018, Michael Jordan, head brewer at Boxing Cat Brewery, not the basketball player, and his team joined forces with Alibaba’s Tmall Innovation Center (TMIC) to brew the world’s first craft beer based on consumer preference data (Drinks Insight Network, 2019). Tmall, China’s largest B2C shopping site and Alibaba subsidiary, has an extremely large amount of data on consumer preferences and shopping behaviour. Therefore, Tmall founded the Tmall Innovation Center, where the platform works with product manufacturers to produce products and services, completely tailored to the market (Drinks Insight Network, 2019).

With the help of TMIC, the team at Boxing Cat Brewery gathered data by sending out surveys and observing shopping behaviour to learn about consumer preferences for beer taste profiles (Hsu, 2019). Boxing Cat Brewery would, in turn, use this data to brew a beer where data is the main ingredient.

Chinese beer consumers are a large fan of darker beer styles with deeper flavours, but also like a surprising twist. The result was therefore a porter beer, with hints of both chocolate and orange, named “Big Luck Big Win” (Hsu, 2019). The beer was just in time to be tested during Chinese New Year (InsideFMCG, 2019).

Craft beer is seen as a very artisanal product. Now it is brewed based on consumer data, does that make it less artisanal? What do you think, would you still buy the beer? Share your opinion in the comments below!

https://youtu.be/qxbct1BQlaQ

Sources
– Drinks Insight Network. (2019, February). Boxing Cat Brewery and Alibaba to create new beer for Chinese market. Retrieved 5 October 2020 at https://www.drinks-insight-network.com/news/boxing-cat-brewery-alibaba/.
– Furnari, C. (2019, December). Looking ahead: Beer Pros Predict The Next Decade Of Industry Trends. Forbes. Retrieved 5 October 2020 at https://www.forbes.com/sites/chrisfurnari/2020/12/31/looking-ahead-beer-pros-predict-the-next-decade-of-industry-trends/#2ac7a5104213.
– Hsu, J.W. (2019, February). AB InBev, Alibaba get crafty in China’s beer market. AliZila. Retrieved 5 October 2020 at https://www.alizila.com/ab-inbev-alibaba-get-crafty-in-chinas-beer-market/.
– InsideFMCG. (2019, February). Shanghai brewery partners with Alibaba’s Tmall to create beer for China. Retrieved 5 October 2020 at https://insidefmcg.com.au/2019/02/05/shanghai-brewery-partners-with-alibabas-tmall-to-create-beer-for-china/.
– Kelly, G., Kopka, U., Küpper, J. & Moulton, J. (2018, April). The new model for consumer goods. McKinsey & Company. Retrieved 5 October 2020 at https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/the-new-model-for-consumer-goods.

China’s 7 million family-run mom-and-pop stores still form a common sight in the streets outside the major cities, together they make up half of the China’s consumer goods sales (Chan & Yang, 2019). These small stores are still only run by families without any business knowledge, buying power with suppliers or the capital to invest in the appearance of their stores. As a result, owners struggle to make a decent income running a sketchy inefficient store. Resident hyperscale retailer Alibaba noticed the size of this market and the struggles of store owners and decided to make a business model out of it…

Meet Ling Shou Tong, Alibaba’s ecosystem to modernize traditional mom-and-pop stores through digitization. First of all, stores that join the platform undergo a full rebranding and makeover to the Ling Shou Tong (LST) appearance. Next, they receive access to all Ling Shou Tong’s digital tools, including an inventory and POS system with a mobile app that streamlines ordering new products at Alibaba. Lastly, they are included in Alibaba’s distribution network, where ordered supplies arrive the next day for fast-movers or in two days for slow-movers (Brick meets click, 2018). The best part of it all is that they get it completely for free.

The impact of the platform on the small stores is huge, suddenly owners are running modern well-managed mini supermarkets, boosting their reach and therefore sales. In addition, Alibaba can leverage the consumer sales data of their entire network of stores to make consumer demand predictions and recommend products serving the needs of consumers within a 300-meter range (Lidsky, 2019). In practice, this means that an LST store can stock up on infant milk in “baby-rich” neighbourhoods and pet supplies in areas with a high concentration of pet owners (Chan & Yang, 2019).

At the other side of the market, over 75% of China’s major CPG players have joined the platform to sell their products at the well over 1 million transformed stores on the platform (Lidsky, 2019). Additionally, the immensely accurate consumer data that the platform generates will be very interesting for their product development. Combined with the rural area distribution system Alibaba is able to set up, makes the CPG players very dependent on the hyperscale retailer.

Both sides of the market are completely controlled by Alibaba and other hyperscale retailers, like JD.com. Especially the small store owners now depend on these players for the food on their plates and the roofs above their heads, raising questions if such a platform does not make Alibaba too powerful. What do you think? Do the benefits of the platform outweigh the power Alibaba accumulates? Share your opinion in the comments below!

https://youtu.be/bnOV_-DVofI

Sources
– Brick meets click. (2018, January). Alibaba initiates new “integrated retail” collaboration with small store owners. Retrieved 5 October 2020 at https://www.brickmeetsclick.com/alibaba-initiates-new–integrated-retail–collaboration-with-small-store-owners.
– Chan, W.C & Yang, J. (2019, January). Partnerships: Key to Success in the Online Age. Oliver Wyman. Retrieved 5 October 2020 at https://www.oliverwyman.com/content/dam/oliver-wyman/v2/publications/2019/January/Boardroom-Vol4/Keys%20to%20Success%20in%20the%20Online%20Age_web.pdf.
– Lidsky, D. (2019, May). How this Alibaba executive has wired up more than one million Chinese mom-and-pop stores. Fast Company. Retrieved 5 October 2020 at https://www.fastcompany.com/90346070/most-creative-people-2019-alibaba-lingshoutong-kevin-lin.