China’s beer is high-end. How good is it?
After the reorganization of Chongqing Brewery Co.Ltd(600132) and Carlsberg, the high-end and nationalization were rapidly promoted. The revenue of high-end products accounted for 35% and the gross profit margin was nearly 62%. The sales growth rate was about 1.5 times that of China Resources beer and 3 times that of Tsingtao Brewery Company Limited(600600) .
The structural changes of Tsingtao Brewery Company Limited(600600) are very obvious. The production, sales and revenue performance of high-grade brand Qingdao and low-grade brand Laoshan rise and fall. The optimization of product structure also promotes Tsingtao Brewery Company Limited(600600) revenue to jump over the threshold of 30 billion yuan for the first time.
The high-end process of China Resources beer, which joined hands with Heineken, slowed down in the second half of last year. The year-on-year (compared with the same period of last year) growth rate of sales of sub high-grade and above products fell to 27.8% from 50.9% in the first half of last year, but the sales volume still remained significantly behind that of Chinese peers.
product structure optimization promotes performance to a new high
Several major beer enterprises in China have handed over beautiful transcripts.
In 2021, the revenue of China Resources beer (Holdings) Co., Ltd. (hereinafter referred to as “China Resources beer”) increased by 6.20% year-on-year to RMB 33.387 billion; The net profit attributable to shareholders of listed companies (hereinafter referred to as “net profit”) increased significantly by 119.1% year-on-year to 4.587 billion yuan. After deducting 1.3 billion yuan of transferred land, the data was about 3.287 billion yuan, a year-on-year increase of 56%.
The Tsingtao Brewery Company Limited(600600) (hereinafter referred to as ” Tsingtao Brewery Company Limited(600600) “) who first joined the 30 billion camp earned 30.167 billion yuan last year, an increase of 8.67% year-on-year; The net profit reached 3.155 billion yuan, a substantial increase of more than 40% year-on-year.
After the reorganization with Carlsberg Co., Ltd. was completed in December 2020, Chongqing Brewery Co.Ltd(600132) (hereinafter referred to as ” Chongqing Brewery Co.Ltd(600132) “) ushered in a new life. In 2021, Chongqing Brewery Co.Ltd(600132) revenue reached 13.119 billion yuan, a year-on-year increase of 19.90%, the highest year-on-year growth rate in recent ten years; The net profit was 1.166 billion yuan, a year-on-year increase of 38.82% (the same as that after restructuring).
China’s beer production has decreased by about 2 million kiloliters in two years, and the traditional beer market may peak. According to the National Bureau of statistics, last year, the output of beer enterprises above Designated Size in China was 35.62 million kiloliters, a year-on-year increase of 5.6%. In 2019, China’s beer production was 37.65 million kiloliters.
High end or a new way for beer enterprises.
In terms of sales volume, the performance of China Resources beer and Tsingtao Brewery Company Limited(600600) is not outstanding. Last year, the sales volume of China Resources beer fell by 0.4 percentage points year-on-year, and the sales volume of Tsingtao Brewery Company Limited(600600) increased by only 1.38%, while the sales volume of both (sub) high-grade and above products increased by 27.8% and 14.2% year-on-year respectively Chongqing Brewery Co.Ltd(600132) last year, the sales volume increased by about 15.1% year-on-year, while the sales volume of high-end products increased significantly by 43.47% year-on-year.
The gross profit margin of beer enterprises is also growing. The gross profit margin of China Resources beer increased by 0.8% to a new high of 39.2% Tsingtao Brewery Company Limited(600600) gross profit margin increased by 1.28% to 36.73%, of which Qingdao brand gross profit margin increased by 0.57% to 43.75% year on year Chongqing Brewery Co.Ltd(600132) gross profit margin increased by 2.49 percentage points, reaching a new high of 51.35%, of which the gross profit margin of high-end products was as high as 61.47%P align = “center” Chongqing Brewery Co.Ltd(600132) product revenue, operating cost and gross profit margin
Tsingtao Beer’s structure has changed dramatically, and the high-end heavy beer has shown remarkable effect
The high-end of beer is reflected in the structural changes of high-end products, mainstream products and low-grade products.
During the reporting period, the proportion of sales volume of (sub -) high-grade and above products in the total sales volume (hereinafter referred to as “sales volume proportion”) increased Chongqing Brewery Co.Ltd(600132) high-end products accounted for 23.71% of sales, while China Resources beer increased by 3.68% to 16.88% The sales proportion of Tsingtao Brewery Company Limited(600600) high-end and above products is not prominent, but it also increased by about 0.8 percentage points to 6.56%.
From the internal structure, the change of Tsingtao Brewery Company Limited(600600) is the most intense. Qingdao brand, which focuses on the medium and high-end market, achieved double-digit year-on-year growth in production, sales and revenue last year; Other brands represented by Laoshan mainly promote the mass market, and their production, sales and revenue fell year-on-year last year. At the beginning of this year, Tsingtao Brewery Company Limited(600600) also released the super high-end beer “Legend of the first world”, with a 1.5L bottle priced at 1099 yuanP align = “center” Tsingtao Brewery Company Limited(600600) product structure
Chongqing Brewery Co.Ltd(600132) vigorously promoted high-end products (the company refers to products above 10 yuan), with a sales revenue of 4.6 billion yuan, a significant increase of 45.47% year-on-year, contributing about 36% of the revenue; Mainstream products (the company refers to products with 6-9 yuan) account for 51% of the total revenue, while economic products (products with less than 6 yuan) account for about 12% of the total revenueP align = “center” Chongqing Brewery Co.Ltd(600132) product structure
At present, Chongqing Brewery Co.Ltd(600132) has successively completed capacity optimization and asset restructuring, and launched into the high-end market with a new attitude. In the “business plan”, Chongqing Brewery Co.Ltd(600132) said that in 2022, it will continue to promote the high-end products in the core market and consolidate the share of core beer. Big cities plan to continue to accelerate the expansion and promote the digitization of sales channels.
Tsingtao Brewery Company Limited(600600) said in the “business plan” that in the future, the company will actively promote the upgrading of product structure, give play to the advantages of production and sales network layout, and continuously consolidate and improve its competitive advantage in the medium and high-end market with sports marketing, music marketing and experience marketing as the main line.
China Resources beer is in the adjustment period of capacity optimization, which has affected last year’s profitability to a certain extent. According to the annual report, China Resources beer closed five breweries during the reporting period. At present, there are 65 breweries with an annual production capacity of about 18.2 million kiloliters. In the item of “management discussion and analysis”, China Resources beer still takes “decisive battle for high-end and quality development” as the strategic theme. It plans to launch a number of new products in 2022, actively study and expand the bistro business, and continue to pay attention to the development opportunities of non beer and alcoholic drinks.
However, it should be pointed out that at present, in order to seize the high-end market, Chinese beer manufacturers also face the strong opponent of Budweiser Asia Pacific Holdings Co., Ltd. (hereinafter referred to as “Budweiser Asia Pacific”). According to the research report data of Puyin international on January 28, as of 2018, Budweiser Asia Pacific accounted for about 46.6% of China’s high-end and ultra-high-end beer market, exceeding the total market share of the remaining four players.
Budweiser Asia Pacific pointed out in its 2021 annual report that under its high-end strategy, the revenue per 100 liters of major markets increased by 6.1%, driving a strong growth of 14.9% in sales revenue. Among them, the super high-end and high-end brand portfolio in the Chinese market achieved double-digit growth in fiscal year 2021P align = “center” market share of China’s high-end and ultra-high-end beer industry. Source: Puyin International Research Report
