China: Budweiser APAC names new chief in efforts to navigate weak Chinese market

Shares of Budweiser Brewing Co APAC rallied the most in more than four years in Hong Kong after the brewer named a new chief executive in efforts to navigate a weak Chinese market, The Standard (HK) reported on February 26.

Budweiser APAC named Cheng Yanjun, a 29-year veteran of the company, to succeed Jan Craps who will step down after seven years, according to a company filing.

Shares of the beer maker surged as much as 13 percent in Hong Kong Wednesday morning following the company’s announcements for earnings and management change.

The company’s decision for a leadership handover, effective in April, comes after the brewer posted a net loss of US$16 million (HK$124.8 million) in the fourth-quarter, missing the US$6.72 million concensus by analysts. The company’s quarterly revenue trends also showed a decline for the fourth consecutive quarter.

“The appointment of a new CEO, which may mitigate negative impact of weak earnings, is a big reason for the rally today,” Richard Lin, an analyst with SPDB International Holdings Ltd, said.

Rival brewers also experienced a tough year in China. Both volume and revenue dropped for Carlsberg in China last year. The Chinese beer market declined by about 4 percent due to weak consumer environment and bad weather during the summer, according to the Danish brewer’s executives at the company’s recent earnings call.

The worst is probably over for Budweiser APAC as it reduces stocking and shifts more focus to mass-market products this year, Lin said.

It remains to be seen whether beer demand will recover this year, Lin added. Beijing has made boosting consumption a key priority to shore up growth for the world second largest economy, amid an ongoing property slump and an escalating trade war with the US.

The company’s top priority in China is to reconnect with market share growth, the firm said in its earnings report. Full-year volumes in the country decreased by 11.8 percent, and total market share declined by 149 basis points.

Budweiser APAC’s new CEO could signal a renewed focus on revitalizing its struggling China business, said Bloomberg Intelligence analysts Ada Li and Joyce Ho.

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 .