AuthorHalf a piece.
EditNian Yi.
TypographyWang Yuetao.
Layout of craft brewing plants, ...... with Coca-ColaIn the past year, Budweiser's series of actions may seem positive, but it is difficult to hide the anxiety behind it.
Recently, Wine News learned through Budweiser APAC's 2023 financial report that although the company's annual revenue increased by 11 percent year-on-year1%, but net profit has declined. Budweiser APAC said this was mainly due to the poor performance in the fourth quarter of last year.
At a time when the consumption structure is upgrading and local brands are making efforts in the high-end market, Budweiser's advantage is being squeezed by all parties, can it still maintain its high-end hegemony?
Screenshot of Budweiser APAC's 2023 financial report
Net profit fell by 67%
On February 29, Budweiser APAC announced its annual results reportIn 2023, the company's total annual sales volume increased by 46% with a total revenue of 68$5.6 billion, an increase of 111%。However, while revenue** was confronted with an increase in Budweiser APAC's cost of sales, which weighed on profitability.
According to the data, the company's full-year cost of sales in 2023 is 340.3 billion US dollars, a year-on-year increase of 98%。Normalized profit (net profit to shareholders) attributable to equity holders for the same period was 8US$5.2 billion, down 668%, normalized EBITDA margin also decreased by 7 basis points year-on-year.
Full-year revenue**, but net profit declined, which was related to the performance of the fourth quarter of last year. Judging from Budweiser APAC's financial report data, the company's net profit in the first quarter, first half of the year and first three quarters was 2$9.7 billion, $5$7.5 billion, 8$7.5 billion, in a state of growth, while the total annual net profit was 8$5.2 billion. The root cause of the "reversal" of net profit in 2023 is the net loss of $23 million in the fourth quarter of 2023. At the same time, Budweiser's sales in the Chinese market, the western and eastern parts of the Asia-Pacific region declined, respectively. 4%。
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In response to the reasons for the decline in sales and the overall strategic plan for 2024, Jiuxun consulted the relevant departments of Budweiser APAC by email, but did not receive a reply as of press time.
In fact, there are already signs of a crisis that threatens Budweiser's dominance in the premium beer market.
Judging from the data, in 2019, the profit attributable to Budweiser APAC equity holders has been 9% compared with 2018$5.8 billion declined to $8$9.8 billion. After the epidemic in 2020, it fell to 5$1.4 billion.
Then, as the global economy recovered, Budweiser APAC "made a comeback" in 2021, but finally failed to stop the downward trend. In 2022 and 2023, Budweiser APAC's profit attributable to equity holders fell for two consecutive years, from 9$800 million fell to 9$1.3 billion, 8$500 million, which is less than the pre-pandemic level.
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Industry insiders said that Budweiser APAC's performance has been in a volatile decline since the epidemic. Budweiser's over-reliance on night clubs and catering has been greatly affected during the pandemic, and Budweiser's performance will inevitably decline. However, the performance has not rebounded significantly after the end of the epidemic, which shows that the beer market as a whole is changing.
Local beers are gaining momentum
One of the cruxes of this "change" is the onslaught of homegrown beers. In the context of the upgrading of consumption structure, local beer brands in various regions have accelerated and increased their high-end upgrades, which not only elevate their own brands, but also launch a close hand-to-hand attack on Budweiser, the overlord of the high-end market.
There's no denying it,"Budweiser" is still the most representative brand in the high-end beer market and has a strong voice in the Asia-Pacific marketIn the past, when the high-end transformation of local brands did not achieve results, it was an absolute talker.
As Budweiser APAC said in its announcement, "Budweiser APAC is currently the largest brand of Budweiser APAC in China, accounting for about half of the company's revenue. Even at this scale, only one out of every three stores in China sells Budweiser. Yang Ke, CEO of Budweiser APAC, believes that with the development of high-end, Budweiser still has a lot of room for development in the Chinese market.
However,The "change" came quietly after the local brand accelerated the high-end transformation。As the structural reform of China's beer market continues to advance and mature, this "fertile soil" of refurbishment has not only boosted the growth of Budweiser APAC, but also accelerated the development of competitors, such as Tsingtao Beer and China Resources Beer.
Tsingtao Beer***
For example, Tsingtao Beer first released the "Legend of the World" high-end single product, then built tsingtao1903 bar across the country, and also landed a high-end specialty beer production base with an annual output of 1 million kiloliters in Laoshan, constantly increasing the high-end layout.
This has directly promoted the company's profit structure to upgrade upward. In 2022, Tsingtao Beer's revenue will be about 3217.2 billion yuan, a year-on-year increase of 665%；The net profit attributable to shareholders of the listed company was about 371.1 billion yuan, a year-on-year increase of 1759%。However, in 2019, the net profit attributable to shareholders of the listed company was 185.2 billion yuan, which has been doubled in 3 years.
Snow Beer Brave the World***
On the other hand, China Resources Beer is also making every effort to improve the layout of the high-end market。In 2018, China Resources completely entered the high-end beer market after acquiring Heineken, and continued to expand its high-end territory with high-end new products such as SuperX and Mars Green. According to China Resources Beer, the company will strengthen its high-end layout through cooperation with Heineken Group and seize 30% to 35% of the high-end market share, which is undoubtedly to cut off the meat in Budweiser APAC's mouth.
It turns outThe high-end layout of China Resources Beer has achieved initial results. In 2022, the profit attributable to shareholders of CR Beer increased by 33% year-on-year to RMB4.3 billion, while the profit attributable to shareholders of Budweiser APAC was 9100 million US dollars, or about 6.5 billion yuan, and the difference between the two is 2.2 billion yuan. However, in 2019, Budweiser APAC's profit attributable to shareholders far exceeded that of China Resources by about 58500 million yuan, the profit gap narrowed by 1 in 3 years7 times, China Resources is gradually approaching Budweiser.
The rise of local brands has caused substantial "damage" to Budweiser APAC. According to Euromonitor data, Budweiser APAC's market share in China's high-end beer market continues to decline, fluctuating around 40%, which is significantly lower than the market share of about 50% at its peak.
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Not only in China, but also in South Korea. The company said in its financial report that Budweiser's sales in the region in 2023 were basically the same as the previous year, due to the launch of new products by local competitors in South Korea and the return of Japanese brands to the Korean market.
Beer marketing expert Fang Gang believes that Budweiser APAC's profit margin has declined mainly because Budweiser's premiumization has been challenged. Budweiser used to have a great advantage in high-end, but in recent years, domestic brands have grown rapidly, and the gap between Budweiser and Budweiser is getting smaller and smaller. The attack of local brands in high-end is relatively aggressive, and the southeast market has also been attacked by domestic brands. For example, Heineken, the offensive in the Fujian market is very rapid, and the combination of snowflakes and Heineken has also achieved certain results, and this series of problems will make Budweiser's profit margin decline.
Can you "defend" success?
Under the challenge of various forces, Budweiser APAC is facing the "match point" of defense.
Budweiser APAC is not resigned to the ever-changing market, and craft brewing is one of its solutions. In 2022, the company put into operation Budweiser Putian Craft Brewery, as the largest craft brewery in Budweiser APAC, in addition to producing well-known brands such as Goose Island and Boxing Cat, it has also developed the Fujian local craft beer brand "059 Coastline Craft Brewing Commune", and continues to develop high-end with the help of craft beer.
059 Coastline Craft Brewing Commune ***
In addition,In order to buffer the competitive pressure of the high-end market, the "tall" Budweiser APAC also lowered its head and began to start the layout of the sinking market. In December 2023, Budweiser APAC and Swire Coca-Cola began to cooperate in selling alcohol, which was interpreted by many as Budweiser APAC's attempt to make up for the disadvantages of sinking channels with the help of small supermarkets and mom-and-pop stores that Coca-Cola is good at.
However, judging from Budweiser APAC's attitude, its focus will still be on the high-end market. Budweiser APAC CEO Yang Ke said at the results conference on February 29 that as the world's largest beer market, China's high-end beer sales account for about 17%, while the proportion in the European and American markets is more than 40%, and the development potential is huge. The potential of the high-end market may become the biggest opportunity for Budweiser to successfully "defend".
It remains to be seen whether Budweiser APAC's optimistic expectations will become a reality, but in terms of 2023 results, this optimistic road has not yet been completed.
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Shen Meng, chief strategist of Guangke Management Consulting, believes that the core market of Budweiser APAC has both traditional local brands and the challenge of rapid growth of emerging brands. As a foreign brand entering the Asia-Pacific market, Budweiser APAC has weak innovation capabilities for its main products, and is not as responsive to changes in consumer demand as other competing brands, relying more on inherent brand value marketing.
In addition, some industry insiders believe that Budweiser APAC needs to continue to insist on innovation, while paying more attention to the interaction with local consumers and the study of market trends. In addition to continuing to promote the high-end strategy, it should also increase investment in the local market, use digital tools and big data analysis to more accurately target consumer needs, so as to occupy a favorable position in diversified competition.
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