(Report Producer/Author: Minsheng Securities, Wang Yanhai, Li Xiao)
Core ideas
1. The competition in the beer industry has shifted from "scale and volume" to "profit price", and the high-end of the industry will be a long-term development trend
Consumers' demand for beer has developed from a simple alcohol demand to a higher level (social, self-gratification), and the upgrading of resident consumption is the basis for the high-end of the beer industry. Under the stable price increase of the industry volume and the stability of the pattern, enterprises turn to "profit" assessment, and high-end has become the consensus of the industry. Looking forward to overseas mature markets, the tonnage price of the mainland beer industry will increase from 3,000+ yuan to 5,000 yuan.
2. Improve efficiency and reduce costs, and develop enterprises with high quality
Excellent brand/product strategy, reasonable asset planning, and corporate management efficiency will bring higher quality development to enterprises. From the three dimensions of product structure, capacity utilization rate and human efficiency, we pursue the α of enterprises.
3. 2022 under the high-end superimposed price increase cycle
In 2021, the high-end of the industry will accelerate significantly, and the total sales volume of the industry will increase. The price increase effect superimposed on the repair of the consumption scene, and the beer industry will usher in a rise in volume and price in 2022.
01 Tracing back to the source, the upgrading of residents' consumption is the fundamental driving force
The consumer demand for beer is diversified
Differentiation creates opportunities for high-end: Relying on flexible production and multi-category layout, high-end products and economic products achieve differentiated competition, cultivate consumer cognition, and create opportunities for high-end. The high-end market is diversified and fragmented, and can accommodate multiple categories and brands.
02 Learn from the past, and choose commonly under the price of stable quantity
Beer is an imported product, and domestic beer has developed rapidly after the reform and opening up
By 1979, there were more than 90 breweries in the mainland, with an annual output of more than 370,000 tons. After the reform and development in 1979, through the introduction of technology, equipment, and talents from abroad, the beer industry has developed rapidly, the expansion and construction of breweries throughout the country have sprung up, and the scale of beer production has gradually expanded.
Production ranked first in the world, peaking in 2013
Thanks to the continent's huge population base, at the beginning of the 21st century, with the sinking of channels and the consumer population brought about by urbanization, the mainland's beer production continued to rise, reaching a historical peak of about 50 million kiloliters in 2013. During this period, the beer itself has also experienced a wave of low-degree, in the pursuit of sales, in order to increase beer consumption, beer companies have reduced the alcohol content of beer, but also let the beer on the label of "water beer".
Since 2013, the industry's tonnage price has increased, and high-end has become a consensus
With the disappearance of the demographic dividend and the aging, the growth rate of the main consumer group of beer (25-40 years old) has slowed down, coupled with the change of residents' consumption habits, since 2013, beer production has declined year by year to 34.11 million hectolitres in 2020. The competition in the beer industry has shifted from "scale and volume" to "profit price", and the beer industry is expected to produce 35.3 million kiloliters in 2021, an increase of 3.5% year-on-year, and the growth rate has turned positive. In the long run, we expect that the mainland beer production is relatively stable, structural upgrades, and ton price increases will be a long-term trend.
The total number of industries is stabilizing, and the five major players have been determined
Because beer sales have transportation radius restrictions, and domestic breweries are everywhere, when the giants expand across regions, they tend to acquire local enterprises, and at the same time, driven by capital, the mergers and acquisitions of the beer industry are continuously integrated, and the giants continue to acquire real estate beer companies in various cities. By 2020, the integration of the beer industry will be basically completed, and the top 5 enterprises will account for more than 90% of the industry's output, and the industry will show an "oligopolistic" pattern.
Enterprise performance appraisal shifted from scale to profit quality
Beer companies have abandoned the competitive strategy of simply pursuing sales scale, and turned to seeking profit growth, and the assessment of corporate strategy has shifted to profit. Under the profit assessment, it is inevitable to make efforts to high-end products. (Source: Future Think Tank)
03 He is the stone of the mountain, looking at the future of the beer industry from overseas
The process of high-end beer in China has just started
Chinese beer is still mainly economical, in recent years, under the education of imported beer, craft beer and other categories, high-end products have gradually taken off, with higher pricing, occupying about 35% of the market share in 2020 (Note: Euromonitor data divides the economy, mid-range and high-end beer by market retail price). Referring to mature markets (such as the United States), high-end beer sales accounted for more than 1/3 in 2020, accounting for nearly 50% of the market share.
There is still a lot of room for improvement in the tonnage price of Chinese beer companies
China's high-end beer market has long been occupied by overseas brands, Budweiser Asia-Pacific beer ton price of nearly 5,000 yuan, while domestic enterprises are generally in 3,000+, compared with the mature market in developed countries 6,000-7,000 yuan there is still a lot of room for improvement. After Chongqing Beer completed the restructuring of assets with Carlsberg, the tonnage price of beer increased to 4383 yuan / ton in 2020, leading the high-end.
The growth rate of tonnage prices in China's beer industry will catch up with the growth rate of residents' income
The fundamental driving force for the increase in the tonnage price of the beer industry is the improvement of the consumption capacity of residents, and in mature markets such as the United States, the growth rate of beer tonnage prices is higher than the growth of per capita income. Since the mainland beer industry has been caught in a low-end price war for a long time, and the ton price increase rate of the industry is much lower than the growth of residents' income, we believe that with the high-end of beer and the change of consumers' perception of beer, the ton price of the mainland beer industry will accelerate.
04 Reduce costs and improve efficiency, and find a way for high-quality development of enterprises
The profitability of Chinese beer companies is differentiated
Overall, the profitability of the beer industry has increased year by year, but the profitability performance of various companies has diverged, and Chongqing Beer has performed well after completing the restructuring with Carlsberg. We analyze the profit differences of beer enterprises from three aspects: product structure, capacity utilization rate and human efficiency, and the upgrading of product structure, capacity utilization rate and improvement of human efficiency will bring the company's α.
The road to high-quality development: product structure upgrading
Wusu leads the high-end product line of heavy beer. Focusing on the main brand of Qingdao, Green Beer launched a variety of categories such as 1903, pure raw, white beer and so on. Super brave, superX to drive snowflakes upwards, join hands with Heineken to enter the high-end.
05 Ebb and flow, outlook for 2022 under the price increase cycle
Not afraid of the disturbance of the epidemic, the high-end of 2021 will accelerate
The beer ready-to-drink consumption scene in 2021 is subject to the constraints of the epidemic and the impact of the weather. In 2021, the overall catering has become a recovery trend, but in the summer, due to the impact of the sudden epidemic, beer production has declined. Sales volume and ton price of leading enterprises maintain growth: leading enterprises have perfect channel layout, wide coverage area, reasonable product structure, beer sales have maintained growth, benefiting from price increases and product structure upgrades, and ton prices have achieved "large single digits" increases. High-end product sales against the trend of high growth, consumption upgrading accelerated: in 2021, the sales growth rate of high-end products of beer companies increased significantly, which was significantly accelerated compared with the past few years, and some large items such as Wusu, Qingdao Classic, and Super Brave performed beautifully.
Cost-driven price increases are expected to usher in volume and price increases in 2022
The cost is rising, and leading enterprises have raised prices: the cost of packaging and barley accounts for the higher cost of beer, which has continued to rise since 2020, and since 21 years, many beer companies have raised prices for their core products. Looking forward to 2022, the price increase landed, the pressure on the cost side weakened: the effect of price increase in the 22-year peak season will gradually be reflected, the cost side, most raw material prices have been at a historic high, glass and other prices have dropped significantly, and the pressure on the cost side will weaken in 2022.
Excerpts from the report:
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Featured report source: [Future Think Tank]. Future Think Tank - Official website