Recently, the news of price increases from consumer goods companies has continued to arouse high concern in the market.
Following the expectation of price increases in Haitian Flavor Industry, Qiaqia Food, Pearl River Beer, etc., driven by the rise in raw materials and transportation costs, prices will continue to be transmitted downstream. China Merchants Securities expects that the food and beverage industry is expected to usher in a wave of price increases in the early 21q4-22 sector.
The market's expectations for beer price increases have also risen again, and the beer sector has ushered in a wave of price increases.
Driven by performance, the beer sector performed well in the third quarter
Wind data shows that after the release of the third quarter of 2021 earnings, the beer sector performed well, rising 19.27% in the week last week.
The short-term rise in stock prices or catalyzed by the news of price increases is not unrelated to the improvement of performance in the long run. At the end of October, the three quarterly results of beer stocks were released.
Anxin Securities released the beer sector three quarterly report summary that in the first three quarters of this year, the beer sector achieved a total revenue of 87.459 billion yuan, an increase of 12.82% year-on-year, and a scale net profit of 11.332 billion yuan, an increase of 37.79% year-on-year.
Entering the third quarter, affected by the overall sales pressure, the beer sector achieved operating income of 30.511 billion yuan (RMB, the same below), a year-on-year decrease of 0.91%, and a net profit attributable to the mother of 4.433 billion yuan, an increase of 9.11% year-on-year.
It is worth mentioning that the profit performance of core beer companies is still better than the mainstream expectations of the previous market, because the high-end shows an accelerating trend, and the increase in the tonnage price of core beer companies increases quarter by quarter.
Among them, the revenue and profit of Chongqing Beer (600132.sh) exceeded expectations, and the revenue of Tsingtao Beer (600600.sh) was basically in line with expectations, and the profit slightly exceeded expectations.
(Source: Essence Securities)
The price increase is expected to heat up, and the high-end products of beer groups have become a consensus
Under the change of consumption habits of young consumers, the consumption concept of "drinking less and drinking good wine" is being recognized, and high-end beer continues to penetrate the low-end beer market.
According to data from Northeast Securities, from 2014 to 2020, the sales volume of medium and high-end beer in the Chinese market increased from 9.72 million kiloliters to 13.38 million kiloliters, and sales also increased from 258.735 billion yuan to 361.817 billion yuan.
For enterprises, the path of choosing high-end product upgrading is undoubtedly to see the profit growth point behind it.
In the context of rising costs, compared with the direct price increase of old products, on the one hand, the launch of high-end new products and category upgrades are easier for consumers to accept, on the other hand, the increase in the proportion of high-end beer has brought about a higher price of tons of wine, which to a certain extent provides better support for the performance of enterprises. This is reflected in domestic beer brands such as China Resources, Green Beer and Heavy Beer after product upgrades.
Taking Tsingtao Beer as an example, in recent years, on the basis of implementing the strategy of "Qingdao main brand and Laoshan second brand", the company has continuously optimized its product structure and accelerated the transformation to high value-added products.
According to the financial report, in the first three quarters of 2021, Tsingtao Beer achieved a total product sales of 7.082 million kiloliters, an increase of 2.02% year-on-year, of which the main brand Tsingtao Beer achieved product sales of 3.784 million kiloliters, an increase of about 13.05% year-on-year.
The remarkable sales volume has led to an increase in the price of tons, and high gross profit products have opened up the company's profit margins. In the third quarter, the tonnage price of Tsingtao Beer was about 3666 yuan / ton (RMB, the same below), an increase of 6.34% year-on-year. The company's net profit attributable to the mother was 1.195 billion yuan, an increase of 6.43% year-on-year; In the same period, the operating income was 8.480 billion yuan, a decrease of 3.01% year-on-year.
At the same time, the increase in profit is much higher than the increase in sales volume and revenue, which once again confirms the high-end strategy.
"The high-end of the beer industry has gradually become the consensus of the industry, and all wine companies will begin to high-end actions." The 'cake' of the high-end market is increasing, but so are the players in the track. Beer marketing expert Fang Gang pointed out.
So far, in addition to the structural upgrading of their own products, it is another way for wine companies to promote the development of high-end by acquiring high-end brands in the stock market.
For example, Chongqing Beer relies on the major shareholder Carlsberg, through the acquisition of High-end brands such as Triumph 1664, Lebao, Carlsberg, etc., to create a product matrix of "local strong brand + international high-end brand", occupying a higher market share in the western region of China. According to the latest financial report, the high-end products of Chongqing Beer in the third quarter achieved revenue of 1.422 billion yuan, an increase of 40.89% year-on-year, and the proportion of high-end products increased by 5.67pcts year-on-year.
China Resources Beer (00291.hk) completed the acquisition of Heineken China in 2019 after launching a series of high-end beer brands such as Superx in 2018, accelerating the pace of high-end layout. Its semi-annual report shows that in the first half of the year, the company's revenue was 19.6 billion yuan, an increase of 13% year-on-year, and the net profit was 4.29 billion yuan, an increase of 106% year-on-year.
Among the main high-end products, superx sales growth in the first half of the year nearly doubled, Heineken sales growth rate of more than 30%, the entire sub-high-end product sales growth rate reached 50.9%, far higher than the company's previous target of 30% annual growth.
Some analysts believe that the domestic beer has made efforts in the high-end market is mainly reflected in two aspects, on the one hand, shrinking the proportion of low-end beer, from "share priority" to "profit priority", on the other hand, consumer demand for high-quality products has increased, product iterative upgrading or directly pushing new and larger high-end market.
Debon Securities also mentioned that from the perspective of the whole industry, due to the upward trend of the cost side, the possibility of vicious competition in fees has been reduced, and it is expected to open the window of the industry to raise prices, and many companies have already carried out price increases to hedge the impact of costs, and it is expected that 2021 or the year of the high-end of the industry will be the beginning of the industry.
postscript
In the case of high-end trends becoming deterministic events, listed companies as a whole will bring more certain profit margins.
But in the short term, the fourth quarter will still be a difficult time for beer companies. Recently, Tsingtao Beer, one of the beer leaders, admitted on the investor interaction platform that the fourth quarter is a relatively low season for product sales for the beer industry, and the capacity utilization rate is low.
At the time of the differentiation of the market's understanding of different breweries and the advent of the consumption off-season, listed companies may face more tests on the cost side, resulting in greater uncertainty.
This article originated from Capital State