China Food

China Resources beer of Heineken makes 2 billion in half a year! The CEO said there was a big opportunity to fight the high end

After an outbreak that hit beer consumption hard, China Resources Brewery (00291. HK) believes that it is a good opportunity to fight high-end and catch up with rivals. Today, China Resources brewery released its 2020 semi annual report. Affected by the epidemic situation, the comprehensive turnover in the first half of the year was 17.408 billion yuan (the same below), down 7.5% year on year. In the first half of the year, the profit attributable to shareholders was 2.079 billion yuan, up 11.1% year on year.

After the announcement of the financial report, Hou Xiaohai, CEO of China Resources beer, and other senior executives attended the performance conference call and talked about the reasons for the adverse growth of profits, Heineken’s trading plan, beer consumption forecast and the expectation for the second half of the year. Next, please see the on-site information sent back by the snack agent.

Profit growth against the trend

According to Hou Xiaohai at the meeting, sales, revenue and profits in the second quarter achieved very strong growth, which made up for the loss in the first quarter to a certain extent. He said that in the second quarter, most parts of the country began to return to normal life, and beer consumption terminals gradually opened up. “The opening of retail channels has basically reached 100%, the catering channels have also recovered by 70-80%, and the recovery of night shows may be only 20% and 30%. In addition, sales were also driven by consumer compensation psychology, channel replenishment of inventory and hot weather in the second quarter.

不过侯孝海也指,由于华润啤酒一季度销量下滑太大,所以二季度销量无法完全弥补损失。该公司在财报中称,2020 年上半年整体啤酒销量同比下降 5.3%至约 6,039,000 千升,表现较行业水平为好。

Hou Xiaohai, CEO of China Resources beer

Although the revenue and sales volume decreased, the profit of China Resources beer in the first half of the year still increased. In this regard, Hou Xiaohai explained that there are three main reasons. First of all, production capacity optimization and other actions have reduced management costs and production costs to a certain extent. Hou Xiaohai said at the meeting that the company closed a brewery in Hunan and Jilin in the first half of the year and successfully completed the staff placement work. According to his introduction, after alleviating the contradiction between the production capacity burden and the industrial structure, capacity optimization is no longer the “top priority” of China Resources beer, but there is still room for further improvement. “We now call (capacity optimization) normal, daily management.” Hou Xiaohai revealed that it is difficult to predict the number of factories that will continue to optimize in the future, but there is no large-scale capacity optimization planning.

Secondly, there is no need to hoard raw materials in the production of packaging materials, which also brings some space for cost saving. Finally, sales of Heineken, a high-end company, grew rapidly in the second quarter, which greatly supported the profit growth. According to the financial report, affected by the epidemic situation, the sales volume of medium and high-grade beer of China Resources decreased by 6.2% year-on-year in the first half of the year. However, thanks to the introduction of Heineken international brand last year and the recovery of sales of various grades of beer in the second quarter, the sales of secondary high-grade and above beer increased by 2.9% in the first half of the year. In the second quarter of this year, China Resources beer launched the high-end product “Heineken silver” beer.

“Industry reverser”

China Resources snowflake is able to hand over a commendable report card without its determination to increase the market against the trend. “After careful evaluation at the beginning of February, we felt that the epidemic had a great impact on a wide range of areas and had a far-reaching impact on the beer industry. It will have a huge impact on sales channels, consumption scenarios, consumption terminals and competition patterns. ” To this end, the company’s management team has developed a new strategic theme, Mr. Hou said. “It is to be the industry’s counter walker, lay stress on hands, focus on tomorrow, and strengthen implementation, so as to speed up the strategy of Snow Beer’s decisive battle with high-end, and shorten the strategic mileage.” “In other words, we see the epidemic as a major opportunity for snowflake beer to fight high-end and catch up with rivals quickly, rather than a job crisis,” Hou said

According to its introduction, on the basis of the new strategic theme and the work of holding several national sales conferences, China Resources beer has formulated a plan of “constant goals, constant strategies, constant investment and more accurate” for brand development and other work. In his opinion, when peers or business plans are adjusted due to the epidemic situation, China Resources beer will “further attack”. According to the financial report, China Resources beer launched a number of sales measures during the epidemic period, such as organizing and promoting the construction of key customer channel mode, expanding high-end catering, night and non instant drinking channels, and improving the ability of high-end sales team.

Among them, a typical example of China Resources beer’s counter trend is to launch a “fierce” propaganda campaign. Hou Xiaohai, in response to a question from the snack agency, revealed that from March this year to now, the company has launched “the strongest” marketing advertising investment, especially activities around Heineken brand and Mars green. In addition, China Resources beer has also made relevant plans for products such as snowflake facial makeup and ingenious creation. This helped China Resources successfully catch up with the summer peak season. Hou Xiaohai told the snack agency that although some markets suffered from rain and flood disasters, which had a slight impact on beer consumption, the company’s sales level in peak season this year is not far behind that of last year. In addition, China Resources beer also accumulated more resources to help high-end products in the first half of the year. “Including high-quality terminal resources, the increase of high-end sales staff, have made great progress in the first half of the year.” Hou Xiaohai said.

Heineken trading plan

At the meeting, Heineken, the object of “marriage” of China Resources snowflake, also became the focus of attention. Hou Xiaohai said Heineken achieved double-digit growth in the first half of the year, thanks to the increase of Heineken’s classic products nationwide coverage and the launch of Heineken star silver at the end of April. According to reports, after the Heineken integration, China Resources beer has provided a series of support for the brand, including the selection of sales terminals, the setting of price system, the establishment of high-end sales team and the development of channel marketing activities. For example, the company independently planned and launched many activities for Heineken brand in the first half of the year, which helped to reduce the impact of the temporary cancellation of Heineken sponsorship activities due to events such as the European Cup.

So how does Heineken plan to develop its strength in the Chinese market? The first is to improve the product mix. According to Hou Xiaohai, another Heineken product in the “4 + 4” brand matrix will be launched in the second half of this year. Data show that the “4 + 4” matrix of China Resources beer includes its own superx, Mars green, ingenuity and facial makeup, as well as Heineken star silver, Heineken classics, sol and Desperado from Heineken.

In addition, Hou Xiaohai revealed that it may also plan to start Heineken’s capacity expansion plan in the future. Xiaoshidai introduced that in the transaction with Heineken, there are three Heineken breweries in the business integration of China Resources beer. It is worth noting that at the meeting, Hou Xiaohai also responded to the question of whether the shared channel of China Resources beer and Heineken would affect the high-end image of the latter, describing it as “meaningless concern”. First of all, Heineken’s positioning will not change due to different sales channels. “Most of China’s high-end (beer) brands are sold through the same channels, including Budweiser or corona. There is no special channel.” Hou Xiaohai said that the difference between channel terminals is only in which brand sells more goods. Secondly, Heineken still maintains a relatively high retail unit price. Hou Xiaohai said that in retail stores, Heineken’s 500 ml single can price is about 9-10 yuan. “This price should be said to be a very high price in the Chinese beer market, which has exceeded our main competitive brand Budweiser.”.


Forecast of annual growth

After the outbreak of the epidemic, an obvious phenomenon is the increase in demand for cost-effective products. Hou Xiaohai believes that at present, this has not affected the trend of accelerating the high-end of China’s beer market. In response to the question of snack food substitutes, Hou Xiaohai said that many reports mentioned the phenomenon of “polarization” after the outbreak of the epidemic, that is, the demand for cost-effective products and high-end products has increased. “However, as far as the beer market and retail market I have visited over 80 Chinese cities, I can see that there is no polarization in China’s beer consumption market. There is only one polar development, that is, the rapid development of medium and high-end products, which is a trend from rural areas to cities.”. He then put forward that in March this year, the CR beer team had predicted which industry trends would accelerate, including high-end, bottled, portable small packaging, community sales, etc. “Our judgment in March is like this. Now we can see that this judgment is still tenable.”.

Looking forward to the second half of the year, Hou Xiaohai believes that considering the impact of rain disasters on some areas in the third quarter, it is expected that the beer industry will maintain a “stable development” state in the third and fourth quarters, and the overall industry will have a negative growth of 6% – 7% in the whole year. As far as China Resources beer is concerned, Hou Xiaohai said that it is expected to maintain the trend of the first half of the year, and hopes to do better on this basis.

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