China: China Resources Beer targeting internet generation and looking into international partnerships

China Resources Beer, the nation’s biggest brewer, is targeting the internet generation’s sense of style as it looks for the next growth market, after reporting an 86.8 per cent increase in net profit for 2017.

Chief executive Hou Xiaohai told a briefing on the company’s results in Hong Kong on March 21 that it is promoting high-quality products like its Brave the World-Super X beer in conjunction with popular music stars and online programmes that appeal to China’s younger consumers.

“Young people are pursuing products that have a high quality and unique character. As long as the product is in line with their style, no matter if it is an international brand or a domestic one, they will pay for it,” Hou said.

“Not many young people are sitting in the living room and watching TV these days. The internet is the major platform in an individual’s everyday activities,” he added.

Net profit was 1.18 billion yuan (US$186.4 million). Its earnings were lifted by the strong performance of the Snow Beer unit, which China Resources Beer took over in 2016 by buying out its joint venture partner SABMiller. Snow contributed a net profit of 1.175 billion yuan in 2017, to China Resources Beer and helped lift beer sales volume by 0.9 per cent year on year, above the industry average.

Total revenue rose 3.6 per cent to 29.73 billion yuan in 2017 from 28.69 billion yuan a year earlier. The company currently is the largest player in China, with about a 26 per cent share of the market. Hou said that the company was confident of an improved sales performance in 2018 that would be better than that of its rivals.

In November last year, the company redesigned Snow’s packaging, bringing in new colourful designs.

“We view the new designs as a meaningful attempt to rebrand Snow as a younger, more energetic brand better equipped to compete with overseas brands, especially in the younger demographics,” said CCB International analyst Maggie Zheng.

China’s top beer makers lift prices in tandem for the first time in a decade

China Resources Beer said it was also interested in international partnerships. In March media reports said it was in talks to acquire Dutch brewer Heineken NV’s China business in a deal said to be worth over US$1 billion.

The company did not give any details on the reported deal, with chief financial officer Lai Po-sing saying only that it has “never stopped looking for opportunities to work with international partners.”

China Resources Beer declared a dividend of 0.07 yuan per share, bringing its total dividend for 2017 to 0.14 yuan per share. The total dividend in 2016 was 0.08 yuan per share.

Shares in the company rose 0.88 per cent to HK$34.25 on March 21.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .