On March 25, China Resources beer, the leader of domestic beer industry, handed over a report card of slight increase in revenue and doubling of net profit. During the reporting period, the company achieved a revenue of 33.387 billion yuan, a year-on-year increase of 6.2%; The net profit was 4.587 billion yuan, a year-on-year increase of 119%. So far, China Resources beer has become the “double leader” in sales and net profit of Chinese beer enterprises.
beer industry competition enters the second half
high end ushers in a prosperous era
If the development of the beer industry is divided into the first half and the second half, at present, the first half of the beer industry has completed the optimization of production capacity and plant closure stage. The optimization of production capacity in the second half is to increase the high-quality production capacity structure, including the construction of some super factories. Behind these actions, it is based on the fact that the era of high-end beer industry has come, and beer enterprises seek layout for high-end development.
In fact, the beer industry has been in a state of low profit for a long time. Low price and low quality once became synonymous with domestic beer, while the field of high-end beer was monopolized by foreign brands. In order to change the decline of domestic beer, China Resources beer, as the industry leader, took the lead in picking up the “scalpel” and shutting down the factory has once become the main action of beer enterprises. Although the action of closing the old plant continues, it is no longer the main theme.
It is understood that in 2021, China Resources beer shut down five factories, but according to Hou Xiaohai, CEO of China Resources beer, the era of great changes in the capacity optimization of China Resources beer has passed. “In the future, 2-3 factories may be shut down and continue to be optimized step by step every year, and the object of optimization is the capacity optimization configuration made according to the overall layout of the market and business.”
Hou Xiaohai told the Securities Daily that at present, China Resources beer has built large factories in Bengbu and Jinan. In addition, China Resources acquired Heineken China in 2019. After three years of operation, Heineken’s nationwide layout has grown rapidly. According to the development trend of Heineken in the next 4-5 years, in addition to the expansion of Heineken Jiashan factory, a national Heineken factory is also built in Fujian to ensure the growth of Heineken’s performance and the realization of its sales target in China.
He Yong, Secretary General of China Wine Association and chairman of beer branch, said that 2021 is the first year of high-end beer in China. From the current overall performance of Chinese enterprises, the high-end development of China’s beer industry has entered a new era of prosperity.
According to the data related to the total output of the national brewing industry in 2021 released by the China Wine Industry Association, China’s beer output reached 356243 million kiloliters, a year-on-year increase of 5.6%. This is the first restorative growth of the beer industry after peaking in 2013 and negative growth for eight consecutive years.
In addition to the expansion of large factories of China Resources beer, many beer companies, including Tsingtao Brewery Company Limited(600600) , Chongqing Brewery Co.Ltd(600132) , are actively expanding production capacity. When interviewed by the Securities Daily, Fang Gang said that this was the specific performance of the beer industry.
In Baijiu industry, the competition of the price of thousand yuan wine has always been a hot topic. After the bid farewell to “low quality and low price”, the beer industry has become the leading choice of the industry.
Last year, after China Resources beer launched its ceiling product Li liquor on the market, Budweiser and Tsingtao Brewery Company Limited(600600) followed suit and launched 1000 yuan beer on the market. In Hou Xiaohai’s view, these actions of beer enterprises are the three major beer enterprises jointly promoting the high-end development of the industry and constantly promoting the upgrading of beer industry and scientific and technological progress.
bid farewell to the era of low gross profit
is there a long way for domestic beer to catch up with imported beer
As a leader in the beer industry, China Resources beer achieved an annual revenue of 33.387 billion yuan last year, a year-on-year increase of 6.2%; The net profit was 4.587 billion yuan, a year-on-year increase of 119%. Behind this achievement is the achievement brought by the high-end development strategy of China Resources beer.
Specifically, the sales volume of China Resources beer in 2021 was 11.056 million kiloliters, a year-on-year decrease of 0.4%, basically unchanged year-on-year. Among them, the sales of the company’s secondary high-end and above products were 1.866 million kiloliters, with a year-on-year increase of 27.8%. The proportion of the sales of secondary high-end and above products in the total sales increased from 13.2% in 2020 to 16.9%. With the increasing proportion of the company’s products above the secondary high-end level, the profitability of China Resources beer is becoming stronger and stronger.
It is worth mentioning that in order to win the hard battle of high-end strategy, China Resources beer earlier put forward the “3 + 3 + 3” nine-year strategy. According to the strategy, 2022 is the sprint stage of the second three-year plan “decisive battle for high-end and quality development”.
“We hope to get a better position in the high-end market and get closer to our competitors. At the same time, we can reach a very ideal level in the construction of high-end sales ability, so that our team, brand combination and sales ability have first-class high-end competitiveness.” Hou Xiaohai told the reporter of Securities Daily.
After handing over the double growth performance, can the goal of this year be achieved as scheduled? Hou Xiaohai gave a positive answer: “operational performance will strive to maintain sustained growth.”
In Hou Xiaohai’s view, the third three years is a “decisive victory” and a win. “From 2023 to 2025, the company’s high-end speed, scale and quality should take the lead in the industry, and realize the transformation of snowflake beer from a Chinese local enterprise to an international first-class enterprise: including management system, management system, management ability, operating cost, enterprise market value and other benchmarking international first-class beer enterprises.”
In addition, China Resources beer also launched the expansion of non beer business last year. Baijiu wine Holding Co., Ltd., which has won the liquor industry leader of Jingzhi, has won the Anhui Golden Seed Winery Co.Ltd(600199) industry. In the strategic Dictionary of Hou Xiaohai, the Huarun liquor industry, including liquor, wine, whisky, yellow wine and liqueur, will be done by the non Huarun category, which is also the mission of the central enterprises to make the main industry and strive to create the world’s first-class enterprises in the Hou Xiaohai’s strategic dictionary.
For the layout of the non beer sector, Hou Xiaohai told the Securities Daily that he hopes to form a “dual empowerment” model of beer + non beer in terms of team construction, channel network construction and liquor brand construction this year. He also hopes that the “dual empowerment” model can be implemented this year, and some models and methods can be formed to promote the cooperation between “central places” (central enterprises and local state-owned enterprises).
In Fang Gang’s view, it may take only 2-3 years for China Resources beer to achieve its final goal (i.e. surpassing Budweiser’s high-end share in China) at the current speed.
