China: Taishan beer brand secures over $92 mln in initial round of equity financing from CMC Capital Group

Chinese original beer brand Taishan has secured over 600 million yuan ($92.2 million) in its initial round of equity financing from CMC Capital Group, a private equity (PE) firm that focuses on media, technology, and consumer-related deals in China, the investor announced on March 22, DealStreetAsia reported.

In a statement, Lee Wei Choy, partner and chief operating officer at CMC, said: “Beer production still has untapped market space that can only be addressed by players with solid products and high operating threshold. As the investor supporting Taishan’s first fundraising effort, we saw the brand’s uniqueness in its product offerings and operating model, which fit perfectly into our investment focus of new structural opportunities brought by China’s consumption upgrade.”

CMC, an investor in China-based beauty unicorn Perfect Diary and new retail upstart KK Group targets to leverage its resources in the consumer sector to help Taishan “further advance brand recognition” and “become a leading player in China’s medium- and high-end beer market”.

Driven by the country’s rapid economic growth, market researcher Euromonitor estimates that China accounts for about 12% of global beer sales as of 2020. Cyanhill Capital, an angel investment firm in China, said in a consumer market report in April 2020 that Chinese consumers have developed more diverse tastes and are more willing to pay a premium for differentiated beer products, although about 70-80% of the domestic beer market is still dominated by the top five players including CR Beer, Tsingtao Brewery, Budweiser, Carlsberg, and Beijing Yanjing Brewery.

Located at the foot of Mount Tai in eastern China’s Shandong Province, Taishan was initially a beer factory built in 1979 and later became part of China’s Hucais Group, an enterprise involved in printing, brewery, and stationery businesses.

Taishan’s product R&D team, led by German specialist Gerhard Luthardt, in 2010 created an original beer product “7 days of fresh” with a shelf life of around seven days to ensure its freshness.

The firm currently provides products through over 1,600 direct-sale stores across the nation, in cities and provinces including Shandong, Beijing, Hebei, Jiangsu, and Guangdong. It claims to deliver beer to front-end stores on the same day of bottling.

Taishan plans to use the new proceeds to build new factories and to expand its production capacity, as it targets to continue to grow the business across other regions in China. Meanwhile, the firm will invest heavily in the digital management of its warehousing and distribution system, last-mile logistics, and service standardisation for direct-sale shops.

“Amid the trend of China’s consumption upgrade, Taishan’s original, short-shelf-life products match consumers’ growing demand for beer that tastes good and differentiates from existing offerings available in the market,” said CMC’s director Dennis Mao Beichen, who leads the investment in Taishan.

“It takes years of experience and extremely high operating capabilities to realise same-day bottling and delivery, as well as the fast circulating of the beer within seven days after hitting the shelf to ensure limited commodity wastage,” said Mao.

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