The first shot of price increase in China’s beer market this year has started! At today’s performance meeting for analysts, Jan craps, CEO of Budweiser Asia Pacific, confirmed that many of its brands, such as Budweiser, had increased their prices.
In the above meeting, Jahnke also revealed that Budweiser’s exclusive distribution agreement signed with Red Bull Austria Red Bull, dragon fire, cinnamon whisky and other high-end spirits will come into effect next month Chinese mainland. In addition, he also talked about why he crossed into two new fields and high-end ideas.
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Budweiser’s price increase involves many brands. The rising price brands include Budweiser, as well as core and affordable brands across the country, young said at the meeting. Since April, the company has increased its price in response to the local inflation level, but the specific increase of different brands is different.
According to the company’s Asia Pacific prospectus, in the Chinese market, Budweiser is a high-end brand, with core brands such as Xuejin and Harbin, and affordable brands such as Shuanglu, jinshibai, Yandangshan and hongshiliang.
In fact, Budweiser’s price rise is not sudden. Xiaoshidai noticed that many investment banks have recently given the expectation that Chinese beer companies will raise their prices this year due to the cost pressure of barley and packaging materials.
In April this year, the top management of listed beer companies also told xiaoshidai that the rise of raw material prices seems to be a trend and is expected to bring great pressure next year. The company will consider the price increase plan according to the overall market trend, the negotiation result of next year’s raw material price and other factors.
At present, Budweiser Asia Pacific has developed a set of solutions to cope with rising costs.
At today’s meeting, Ignacio Lars, the company’s chief financial officer, said that in terms of raw materials, Budweiser Asia Pacific will use hedging strategy to lock in the price of raw materials as early as one year as possible. At the same time, the company has the flexibility to purchase raw materials globally on demand, such as barley from different countries. In addition, Budweiser Asia Pacific will also help suppliers to provide operational efficiency.
“We want to take some measures to offset the cost pressure, not only in 2021, but also in 2022.” Ignacio Lars said.
Starting from this year, Budweiser is no longer satisfied with only selling beer in China, but has also crossed into two new fields: spirits and energy drinks.
In the liquor industry, Budweiser Asia Pacific announced in April this year that it has gained exclusive rights to sell high-end brands in Chinese mainland, including Fireball Whisky (dragon, cinnamon whiskey), Buffalo Trace, Southern Comfort and other high-end liquor brands of Sazerac brand. Red Bull is the Chinese mainland distributor of Red Bull Austria Red Bull, and is planning to expand its product to more city and channel.
As for why we want to be the “seller” of these products, Yang Ke gave the answer for the first time at today’s meeting: all for high-end.
He said that for Budweiser Asia Pacific, the above two categories have greater profit margins, and the products they cooperate with are high-end products“ Obviously, there are different versions of Red Bull on the market, but it’s a high-end version. ” He stressed.
Yang Ke also mentioned that spirits and energy drinks belong to high growth categories, and are also the “adjacent categories” of beer, which can enable Budweiser Asia Pacific to seize a wider range of drinking opportunities. For example, by combining beer innovation, spirits can help Budweiser enter new situations.
“We expect purchasing demand in both segments to continue to increase due to the increase in disposable income. We can also focus on areas with greater demand according to the market maturity model. ” Yang Ke said.
Jan craps, CEO of Budweiser Asia Pacific (photo)
In its view, Budweiser Asia Pacific’s sales network also provides the foundation for new areas.
Yank said at the meeting that the company has established a strong market access, and its partners in night and bar channels are also very interested in expanding to spirits and energy drinks“ Therefore, we have a lot of positive motivation to expand our product portfolio, and we can use the power of our market access partners to expand and win in the high-end market. “.
Turn losses around
In the first quarter of this year, Budweiser Asia Pacific, once hit by the epidemic, finally turned its losses into profits.
Today, Budweiser Asia Pacific announced its first quarter results of 2021, showing that its revenue during the period was US $1.626 billion, up 63.7% year on year, mainly due to the strong performance of China’s business and the low base of last year; The profit attributable to equity holders during the period was $233 million, compared with a loss of $41 million in the same period last year. In addition, the total sales volume was 2.079 billion liters, up 64.6% year on year.
Let’s focus on the performance of the Chinese market. According to the announcement, in the first quarter of this year, Budweiser China’s revenue increased by 92.5% year-on-year, and its earnings before interest, tax, depreciation and amortization increased by 243.5% year-on-year, both higher than the level in 2019.
During the reporting period, Budweiser China’s sales increased by 84.6%, mainly due to the strong growth momentum brought by the spring festival marketing activities for the whole quarter and the low base of last year. The company expects its total market share to expand in the first quarter of 2021, while channel inventory levels remain healthy.
“According to Nielsen, in the first quarter of 2021, our market share in retail and e-commerce channels also increased.” The announcement said.
According to the announcement, high-end and super high-end products continue to be the main driving force for growth. Among them, the revenue of Budweiser brand doubled in the first quarter, double-digit growth compared with the same period in 2019. In addition, compared with the first quarter of 2019, super high end portfolio revenue also recorded double-digit growth“ In terms of value, corona is still the number one super high-end brand. Compared with the first quarter of last year, the revenue of refined products doubled. ” Ignacio Lars revealed at the meeting today.
In addition, xiaoshidai noticed that some analysts asked questions at the meeting about the Indian market situation and future trend of the recent outbreak of the epidemic. In response, Yang Ke said that the top priority of Budweiser Asia Pacific in India is to ensure the health and safety of employees. Despite the grim situation in the first quarter, India’s sales and revenue achieved double-digit growth, driven by high-end, super high-end and non-alcoholic products.
It also said that although it is difficult to predict the development of the Indian market in the short term, it still has a positive view on the potential of the market in the long term“ Few countries have more than 1.3 billion people, and the age distribution of India’s population also brings great opportunities for consumption growth. ” In addition, the high-end trend is also strong, and Budweiser Asia Pacific is also a high-end market leader in the country, Yang said.
Looking forward to the future, Yang Ke said at the meeting today that he was excited by the continuous recovery of business and would continue to focus on high-end strategy, innovation in beer and other fields, and accelerating digital transformation.
As for the Chinese market, he said that even though Budweiser’s brands have a certain scale, “there is still a long way to go.” the reasons include that the distribution level of the brands is less than 50%, and they have maintained strong growth in regions with low market share.
Yang Ke pointed out that the company will continue to introduce new products in regions with high market share. In regions with low market share, Budweiser will also focus on introducing new products and expanding its sales network.
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Budweiser has gone up in price! Today, the CEO of Asia Pacific held hands with red bull of Austria in China for the first time!