China's largest brewer Tsingtao has reportedly signalled its confidence in the country's beer market and forecast strong growth in the second half of the year.

Tsingtao said a focus on premium brands would drive that growth with cost cuts offsetting rising raw materials costs and growing competition in China, Reuters said today (7 September).

Executive director Liu Yingdi told a Reuters-sponsored economic summit that he hopes to expand the firm's sales volumes by 7% to 10% annually in coming years. Its volumes leapt 10.5% during the first half of the year with sales of its premium brands soaring 24%, the report said.

The forecast from Tsingtao comes hot on the heels of first-half results from its nearest rival, SABMiller's local venture China Resources Snow Breweries.

The brewer said beer sales had leapt 28% during the first half of the year. The venture's flagship brand, Snow, saw sales soar 85%.

Nevertheless, Heineken CEO Jean-Francois van Boxmeer said yesterday that China remained a tough market.

He said: "It's a very tough market structurally. We don't have a pessimistic view on China but we don't see going forward anything that will make that situation structurally change. There is chronic over-capacity in the market of around 30%."

According to Reuters, Tsingtao's Liu also said there was too much capacity in China, while fierce competition made it tough to raise prices.

"There's too much capacity in the market, raw material costs just keep rising, and we can't raise prices," he was quoted as saying.