China: Chongqing Beer reports 11.16% increase in first-half operating income

On August 17, Chongqing Beer disclosed its 2022 semi-annual report. According to the financial report, in the first half of this year, the company achieved operating income of 7.936 billion yuan, a year-on-year increase of 11.16%; net profit of 728 million yuan, a year-on-year increase of 16.93%.

During the reporting period, Chongqing Beer achieved a beer sales volume of 1,648,400 kilolitres, an increase of 6.36% over the same period in 2021 (1,549,900 kilolitres). According to data from the National Bureau of Statistics, from January to June 2022, the total brewing output of beer enterprises above designated size in the country was 18.442 million kilolitres, a year-on-year decrease of 2.0%. It is not difficult to see that the growth rate of Chongqing beer sales is significantly higher than the industry level.

In December 2020, the major shareholder of Chongqing Beer, Carlsberg, injected its high-quality beer assets in China into Chongqing Beer, which became the only platform for Carlsberg to operate beer assets in China and became the fourth largest beer company in China. Since then, Chongqing Beer has completed the advancement from a regional beer enterprise to a national beer enterprise, and its core market has expanded from three provinces and cities including Chongqing, Sichuan and Hunan to Xinjiang, Ningxia, Yunnan, Guangdong and East China and North China provinces. Covering all parts of the country.

In terms of brand, Chongqing Beer adopts the brand combination of “local strong brand + international high-end brand”. Among them, international high-end brands include Carlsberg, Roborg, Kaixuan 1664, etc., while local brands include Wusu, Chongqing, Shancheng, Dali, etc.

According to the consumer price, Chongqing Beer divides its products into three grades: high-end (more than 10 yuan), mainstream (6-9 yuan) and economical (below 6 yuan). In the first half of this year, Chongqing Beer’s high-end product sales revenue was 2.88 billion yuan, a year-on-year increase of 13.33%; mainstream products achieved revenue of 3.929 billion yuan, a year-on-year increase of 9.09%; economical products increased by 11.55% year-on-year to 960 million yuan.

It is not difficult to see that Chongqing Beer’s high-end beer revenue has grown the fastest, which is also in line with the general trend of consumption upgrades in the beer industry. Zheshang Securities pointed out in a research report that from 2014, the production and sales of the domestic beer industry showed a downward trend until 2021, when it rebounded to 35.624 million kiloliters, a year-on-year increase of 4.44%, but still lower than the level in 2019. Therefore, the growth of the beer industry at the current stage is mainly driven by price increases in the context of high-endization.

In addition to Chongqing Beer, China Resources, Qingdao and other leading beer companies will also focus on the mid-to-high-end market. In 2021, thanks to the increase in the proportion of mid-to-high-end products, Tsingtao Brewery’s revenue will increase by 8.67%, but its net profit will increase by 43.34%.

It is worth mentioning that the “Wusu” brand with strong Xinjiang color has become the key for Chongqing Beer to conquer the high-end market. In 2021, the sales growth rate of Wusu Beer is nearly 40%, far exceeding other big single products. In addition, in March this year, Chongqing Beer launched a high-end product, Chongqing Gold Beer, to further strengthen the high-end portfolio of Chongqing Beer.

Cinda Securities believes that in 2021, the top five beer manufacturers will account for 72% of the national beer production, of which Run Beer 24%, Tsingtao Beer 18%, Budweiser 16%, Heavy Beer 7.1%, Yan Beer 6.9%, the industry pattern is regionally stable. Among them, Chongqing Beer has outstanding continuous high-end capabilities, and the revenue increment brought by the deep nationalization of Suzhou is expected to exceed expectations, making it the most promising in the beer industry.

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