Recently, the Consumer Council of Hong Kong ("Hong Kong Consumer Council") tested 30 types of prepackaged canned or canned beer for the first time, and the test results have aroused market concern. The Hong Kong Consumer Council found that all the samples were found to contain different types and levels of biogenic amines, while the "Harbin Beer Wheat Race" was found to contain mycotoxin DON. It is understood that Harbin Beer is now a brand of Budweiser Investment (China) Co., Ltd. (hereinafter referred to as "Budweiser China"). The reporter noted that Budweiser China has been administratively punished for publishing illegal advertisements many times in recent years, with a cumulative fine of more than 1.4 million yuan. Budweiser APAC (1876. HK) last year's performance was lower than expected, and it fell into the dilemma of "increasing revenue but not increasing profits".
Mycotoxins were detected in its products
According to the report released by the Hong Kong Consumer Council, the "Harbin Beer Wheat Channel" was detected with a detection level of 26 micrograms per kilogram of DON, which is still within the safe level for an adult weighing 60 kilograms, even if 4 cans are consumed in 1 day. However, the risk of DON should not be taken lightly, as DON is also known as vomitoxin, which may cause symptoms such as nausea, vomiting, diarrhoea, abdominal pain and fever within 30 minutes after excessive ingestion, which is similar to the symptoms of other gastrointestinal diseases. In addition, all samples were found to contain different types and levels of biogenic amines.
According to the Hong Kong Consumer Council, barley, a raw material for beer, may be contaminated with mould due to improper storage, and the mycotoxins in it remain in the beer during the production process. The Hong Kong Consumer Council advises manufacturers to carefully select high-quality, purified and well-stored raw materials to brew beer to minimise the risk of DON in their products.
It is understood that Harbin Beer is now a beer brand of Budweiser China, Budweiser China used to be known as "Budweiser InBev Investment (China) Co., Ltd.", and its related subsidiaries were spun off and listed in Hong Kong, namely Budweiser Asia Pacific (1876. HK）。 Budweiser APAC is principally engaged in the brewing and distribution of beer, and its beer brands mainly include Budweiser, Times, Corona, Fujia, Kaishi and Harbin. In addition, the Company also manufactures, promotes, distributes and sells other non-beer beverages, with operations mainly located in China, South Korea, India, Vietnam and other Asia-Pacific regions.
The reporter repeatedly called the phone number registered by Budweiser China in Tianyancha to try to understand the reasons behind the relevant report and its impact, but the call was never answered.
Repeatedly published illegal advertisements and was administratively punished
The reporter searched a total of public information and found that since May 2021, Budweiser China has been fined more than 1.4 million yuan by the Market Supervision and Administration Bureau for suspected violations of the "Advertising Law of the People's Republic of China".
Specifically, in August 2022, the Shanghai Huangpu District Administration for Market Regulation fined Budweiser China 600,000 yuan and ordered it to stop publishing illegal advertisements and eliminate the impact within the corresponding scope. The bureau's investigation found that the relevant advertisements published by Budweiser China's WeChat official account "Harbin Beer HarbinBeer" were suspected of violating the relevant provisions of the Advertising Law of the People's Republic of China, constituting the publication of alcohol advertisements with "drinking movements". The bureau held that Budweiser China's illegal advertisements were published on a single self-media, and the illegal advertisements were deleted immediately after the incident, and no damage to human health, persons or property was caused. However, given that Budweiser China published the advertisement on May 28, 2015, the illegal act lasted for a long time. In addition, because Budweiser China was administratively punished for publishing illegal advertisements on the Internet for four times from 2019 to 2021, it was decided to impose a heavier penalty on the parties after comprehensive consideration.
In October 2022, Budweiser China was fined 5,000 yuan by the Huangpu District Administration for Market Regulation and ordered to immediately stop the infringement, and the facts of the violation and the reason for the punishment were: Budweiser China published a blog post through the official certification Sina Weibo "Harbin Beer" without the permission of the right holder of the Olympic symbol, and used the Olympic symbols such as "Olympics" and "Olympic" without authorization, and displayed them in the form of words, pictures, topics and other forms at the same time as product promotion and lucky draws such as "Hawthorn Flavored Beer".
Previously, in May 2021, Budweiser China was also fined 600,000 yuan by the Huangpu District Administration for Market Regulation for publishing advertisements containing terror, violence and drinking behavior, and in November 2021, Budweiser China was again fined 250,000 yuan by the Jing'an District Administration for Market Regulation in Shanghai for publishing alcohol advertisements containing drinking behavior, and ordered to stop the publication of advertisements.
In addition, Budweiser China's affiliates have also published false advertisements in sales promotions. In May 2021, the Shanghai branch of Budweiser (China) Sales Co., Ltd. was fined 200,000 yuan by the Shanghai Huangpu District Market Supervision and Administration Bureau. Law enforcement authorities found that the water and yeast in the beers handled by the branch had been manually tampered with or treated, but the company's advertisement that "Budweiser always uses the highest quality all-natural ingredients at all costs" constitutes an act of publishing false advertisements that deceive and mislead consumers with false product ingredients.
Budweiser APAC "increased revenue but not profits" last year
What has attracted much attention from the market is that Budweiser APAC's performance last year was lower than expected, and it fell into the dilemma of "increasing revenue but not increasing profits".
According to Budweiser APAC's recent financial report, in fiscal year 2023, revenue will be US$6.856 billion, up 11.1% year-on-year, revenue per hectoliter will increase by 6.2%, sales volume will reach 9.28 billion kilograms, up nearly 4.6% year-on-year, and normalized earnings before interest, taxes, depreciation and amortization will be US$2.023 billion, up 10.8% year-on-year. However, due to the impact of non-basic tariff provisions in South Korea, Budweiser APAC's profit attributable to equity holders decreased from US$913 million in 2022 to US$852 million in 2023, a year-on-year decrease of 6.68%.
It is worth noting that Budweiser APAC had a poor performance in the fourth quarter of last year. According to the financial report, Budweiser APAC's revenue in the fourth quarter of last year was $1.29 billion, and the net loss reached $23 million, which was lower than expected. During the same period, Budweiser APAC saw a decline in sales in a number of key markets. In the western part of the Asia-Pacific region, China, and the eastern part of the Asia-Pacific region, sales fell by 1.9%, 3.1%, and 3.4%, respectively, and sales in South Korea also declined.
SPDB International recently released a research report saying that Budweiser APAC's medium- and long-term growth logic is not as good as that of Chinese beer companies, on the one hand, the sales volume of high-end and ultra-high-end products has reached more than 50%, and the marginal profit margin expansion effect brought by high-end in the future is relatively weak, on the other hand, the Korean market will continue to drag down the company's overall performance and valuation in the medium and long term. As a result, SPDB International has significantly lowered its earnings forecast for Budweiser APAC from 2023 to 2025. Haitong International has also lowered its earnings forecast for Budweiser APAC and downgraded its investment rating to "neutral". Haitong International believes that considering the short-term pressure on consumer demand, the company is more conservative than its competitors on the cost investment side, and the main products in the Chinese market are in the highly competitive high-end price band, and the volume decline in the Korean market has not seen an inflection point. Huaxing Securities released a research report saying that product upgrades are still continuing, but the high base may hinder Budweiser APAC's performance in the first half of 2024.
Source: Economic Reference Network
Reporter: Zhang Juan
Editor: Zheng Jianlong
Source: Xinhuanet Finance
![30 years ago, many Hong Kong people were frightened by this TV commercial![fig]](data:image/gif;base64,R0lGODlhAQABAIAAAP///wAAACwAAAAAAQABAAACAkQBADs=)