When the blueprint of tens of billions of yuan is drawn in the liquor track, the main business track of China Resources Beer is full of turbulence. On April 16, the editor of the business news learned from the official account of the Shanghai Stock Exchange that nearly ten China Resources Beer asset treatment projects are being promoted, involving Dazhou in Sichuan, Shantou in Guangdong, Quanzhou in Fujian, Tianjin, Yilan and Qiqihar in Heilongjiang, Tieling, Huludao, Fuxin in Liaoning, Changchun in Jilin and other places.
From the acquisition of 26 factories by relying on the "mushroom strategy" at the beginning of its establishment, to the successive closure of 36 factories within 8 years, China Resources Beer has been bent on high-end expectations behind the abandonment of inferior production capacity. Nowadays, when the high-end beer market is in full swing, China Resources Beer lags behind its peers in gross profit margin and sales of high-end products.
Ten consecutive asset disposal items
Xiaobian logged on to the official account of the Shanghai Stock Exchange and found that from April 2 to 10, the promotion series of China Resources Beer's asset disposal project has already become a frequent visitor to the official account. It is understood that in the promotion series of China Resources Beer asset disposal projects, a total of 10 factory asset transfers are involved.
According to public information, the 10 factory asset transfer projects are China Resources Snow Beer (Sichuan) Co., Ltd. Dazhou Branch Factory, Snow Beer (Shantou) Co., Ltd. Guangdong Shantou Factory, China Resources Snow Beer (China) Co., Ltd. Fujian Branch Fujian Quanzhou Factory, China Resources Snow Beer (Tianjin) Co., Ltd. Factory Asset Transfer, China Resources Snow Beer (China) Co., Ltd. Yilan Branch Heilongjiang Yilan Factory, China Resources Snow Beer (China) Co., Ltd. Shenyang Branch Liaoning Tieling Factory, China Resources Snow Beer (Liaoning) Co., Ltd. Huludao Branch, Liaoning Huludao Factory, China Resources Snow Beer (Changchun) Co., Ltd., Jilin Changchun Factory, Snow Beer (Qiqihar) Co., Ltd. Qiqihar Factory, and China Resources Snow Beer (China) Co., Ltd. Shenyang Branch Liaoning Fuxin Factory.
In response to the situation and reasons for the ten asset transfers, the relevant departments of China Resources Beer pointed out in an interview with the editor that the asset transfers searched in the official account of the Shanghai Stock Exchange are all factories that have been shut down before December 31, 2023, and belong to the regular asset transfer publicity.
In this regard, Xiao Zhuqing, a wine marketing expert, said that the current beer market has gradually transitioned from the pursuit of output competition in the past to the current competition for quality. Previously, China Resources had integrated many regional wineries through capital strength, which had certain advantages in the context of seeking market coverage in the past. However, at present, beer and liquor companies are strengthening the cultivation and incubation of high-end brands, and the traditional cheap industrial beer obtained through the acquisition of breweries is no longer competitive.
According to the statistics of the editor, the companies involved in the asset transfer are mainly concentrated in Sichuan Province, Guangdong Province, Fujian Province, Tianjin City, Heilongjiang Province, Liaoning Province and Jilin Province. It is worth noting that among these 7 provinces and cities, China Resources Beer has a strong region and occupies 5 seats.
In Heilongjiang Province, Liaoning Province, Jilin Province, Sichuan Province and Tianjin City, China Resources Beer has the first market share. According to public information, in the above five provinces and cities, the market share of China Resources Beer is 49%, 67%, 51.5%, 79% and 46% respectively, all of which rank first. In addition, China Resources Beer's market share in Guangdong Province is 25%, which is not as good as Tsingtao Beer's 29% market share, ranking second.
Practitioners in the beer industry pointed out that during the period of staking in the beer industry, China Resources Beer expanded its production capacity through acquisitions and continuously improved its regional market advantages, forming a high market share. But as the industry grows, inefficient production capacity is gradually eliminated, so factories will be sold off.
The factory is easy to collect and easy to sell
For China Resources Beer, which has transferred assets from 10 factories in a row, it is not the first time that factories have been shut down and suspended. The editor combed through the data and found that the number of China Resources Brewery factories has closed from a maximum of 98 to 62 by the end of 2023. After rough calculation, China Resources Brewery decreased by about 36.73%.
Looking back at the early days of the factory closure wave, China Resources Beer has continued to close its factories since 2017. According to the financial report data of previous years, from 2016 to 2022, the number of breweries operated by CR Beer in 25 provinces, cities and districts in Chinese mainland is 98, 91, 78, 74, 70, 65 and 63 respectively.
The continuous decline in the number of factories has not stopped the "wave of factory closures" of China Resources Beer. According to the 2023 annual report, by the end of 2023, CR Beer operated 62 breweries in 24 provinces, municipalities and districts in Chinese mainland, of which 2 breweries were closed and operated in 2023.
In the context of the continuous sale of factories, the production capacity of China Resources Beer has also fluctuated and declined due to its impact. Xiaobian combed the financial report and found that in the past 6 years, the production capacity of China Resources Beer has reached a maximum of 22 million kiloliters and a minimum of 18.2 million kiloliters. According to the financial report data, from 2017 to 2023, the production capacity of China Resources Beer will be 22 million kiloliters, 21 million kiloliters, 20.5 million kiloliters, 18.75 million kiloliters, 18.2 million kiloliters, 18.414 million kiloliters and 19.1 million kiloliters respectively.
Fang Gang, a beer marketing expert, believes that the closure of China Resources Beer after a large number of acquisitions is the result of capacity optimization. In the process of rapid expansion, due to the urgency of acquisition, a lot of garbage production capacity and backward production capacity were also acquired, and then became a burden and then optimized.
In the early stage of the beer industry, mergers and acquisitions became one of the important means to increase production capacity. As China Resources Beer, which has a low market share in the early days, it is also difficult to "get out of the ordinary". It is reported that in order to penetrate the "point" market, China Resources Beer has successively acquired 26 strong brands such as Yueshan Beer, Mengyuan Beer, Golden Lion Beer, Blue Sword Beer, and Jinwei Beer through the "mushroom strategy" and "strategy of central cities along the river and coastal areas", most of which are the largest beer companies in the region, and the number of acquired liquor companies has gradually expanded to 100 since then. At that time, after acquiring local breweries, China Resources Beer occupied production capacity and invaded the local beer consumption market, thereby rapidly increasing its market share while expanding its scale.
Fang Gang said that the rapid expansion of Chinese beer in that year was based on capital acquisitions for staking land, and China Resources Beer was able to quickly reach the first place in China's total beer, mainly through large-scale provincial acquisitions to expand its sales area.
Single-mindedly "high"
When waves of factory closures continued and frequently stopped at liquor, China Resources Beer was worried about its main business, with sales of high-end products falling short of expectations, and gross profit margin lagging behind its peers, which became one of the problems facing the company.
"The growth of high-end products is less than expected, and the sales volume in 2023 will only be 400,000 tons. Regional markets such as Shandong have seen volatility. Hou Xiaohai, chairman of the board of directors of China Resources Beer, said frankly at the 2023 performance briefing. In response to the reason, he said that it was mainly caused by the price increase and intensified competition.
According to the financial report data, the annual sales volume of China Resources Beer's beer business segment last year was 11.151 million kiloliters, of which the sales volume of sub-high-end and above beer was about 2.5 million kiloliters. After rough calculation, the sales volume of sub-high-end and above beer of China Resources Beer accounted for about 22.42%.
Compared with its peers, in 2023, Tsingtao Beer will achieve a total sales volume of 8.007 million kiloliters, of which the sales volume of mid-to-high-end and above products will be 3.24 million kiloliters, accounting for 40.46%, and the total sales volume of Chongqing Beer in 2023 will be 2.9975 million kiloliters, of which the sales volume of high-end products will be 1.4375 million kiloliters, accounting for 47.96%.
In view of the sales of high-end beer, Xiaobian visited the terminal market and found that in the KA store channel, the best-selling high-end beer products mainly include Budweiser Beer, Tsingtao Beer Classic 1903, Yanjing U8 and Brave the World superX, etc., while in the convenience store channel, Budweiser, 1664 and Corona and other products have become high-end beer products with high consumer purchase frequency. In the night channel with fierce competition for high-end beer, the reporter found that the beer products are mainly Budweiser beer and Corona, followed by the products of 1664 and Tsingtao Beer. Heineken, a subsidiary of China Resources Beer, is sold in the night channel, but the number of nightclubs selling this product is small.
Beer practitioners pointed out that at present, domestic high-end beer products are mainly concentrated in Budweiser beer and Tsingtao beer. Among them, for the Beijing market, Yanjing Beer is also one of the mainstream beer brands, so the overall sales of Yanjing U8 are also better. In this context, if China Resources Beer wants to catch up in the high-end market, it will still take time in terms of channels and markets.
When the high-end competition in the beer track gradually entered the white heat, China Resources Beer "fell behind" in the gross profit margin. Xiaobian combed through the data and found that in 2023, the gross profit margin of China Resources Beer business increased by 1.7 percentage points year-on-year to 40.2%, compared with its peers, the gross profit margin of Chongqing Beer in 2023 was 49.75%, of which the gross profit margin of high-end products was as high as 55.01%. In addition, Budweiser APAC's gross margin in 2023 is 50.4%.
Nowadays, with the intensification of competition in the high-end market, there are still many problems that need to be solved for China Resources Beer if it wants to deepen the high-end market and "counterattack" to become a high-end hegemon. Liu Xiaowei, a wine marketing expert at Rongze Consulting, said that in order for China Resources Beer to reach the first place in high-end beer in 2025, it needs to reshape and break through the marketing system such as brand building, high-end brand building, consumer cultivation, and optimization of high-end product sales channels.
At the same time, Fang Gang further pointed out: "China Resources Beer still has many challenges, in addition to brand problems, there are also channels, organizational problems, and even a series of problems including products, it is difficult for China Resources Beer to become the industry's No. 1 mid-to-high-end brand in a short period of time, which takes a long way." ”
Liu Yibo, Feng Ruonan/text
Source: Beijing Business Daily