Core Viewpoint - Budweiser Asia Pacific is reportedly planning to cut approximately 15% of its operating costs, including thousands of layoffs, particularly affecting its Chinese operations, which account for over 80% of its total workforce. Despite the company's denial of these claims, market skepticism remains due to its declining performance in the region [2][3][4]. Group 1: Performance Pressure and Layoff Rumors - Budweiser Asia Pacific's 2024 financial report shows a revenue of $6.246 billion, a decrease of 8.9% year-on-year, with gross profit down 8.86% to $3.147 billion and net profit down 14.79% to $726 million [4]. - In the Chinese market, Budweiser's sales plummeted by 11.8%, with revenue and revenue per hectoliter declining by 13% and 1.4%, respectively, leading to a market share drop of 1.49 percentage points [4][5]. - The company employed over 21,000 staff in 2024, down from approximately 25,000 in 2023, indicating a reduction of about 4,000 employees, or 16% [5]. Group 2: Industry Context and Competitive Landscape - The beer industry is entering a phase of stock competition, making cost control a crucial strategy for companies [8]. - The trend towards premiumization in the domestic beer market has intensified competition, with brands like China Resources Beer and Qingdao Beer accelerating their high-end strategies, posing a direct threat to Budweiser's market share [10][11]. - Emerging craft beer brands are also challenging Budweiser by focusing on differentiation and consumer experience, appealing to younger consumers [12]. Group 3: Leadership Change and Strategic Direction - Following a disappointing financial report, Budweiser Asia Pacific announced a leadership change, with Jan Craps stepping down and Cheng Yanjun taking over as CEO [15][16]. - The new CEO aims to refocus on Budweiser and Harbin Beer brands, leveraging the potential of non-immediate consumption channels in China, where only one-third of stores sell Budweiser products [17]. - The success of this strategic shift will depend on balancing global resources with local market insights, particularly in optimizing supply chains and addressing the challenges of a competitive high-end market [17][19].

Core Viewpoint - The Chinese beer industry faces significant challenges in 2024, with a notable decline in sales and a shift in consumer behavior impacting revenue and profit margins [1][4][5]. Revenue and Profit Summary - In 2024, seven listed beer companies achieved a total revenue of approximately 152.13 billion yuan and a net profit of about 17.44 billion yuan [1]. - The revenue distribution among these companies shows three main tiers: over 30 billion yuan, between 10 billion and 30 billion yuan, and below 10 billion yuan [1]. - Budweiser APAC leads with a revenue of 62.46 billion yuan, followed by China Resources Beer and Tsingtao Brewery with revenues of 38.64 billion yuan and 32.14 billion yuan, respectively [1]. Performance Disparity - 57% of the beer companies experienced a decline in sales volume, attributed to a decrease in on-the-go consumption and high-end product sales [1][4]. - Among the seven companies, four reported a decrease in revenue, with Budweiser APAC, China Resources Beer, Tsingtao Brewery, and Chongqing Beer showing declines of 8.9%, 0.76%, 5.3%, and 1.15%, respectively [2][3]. - Conversely, Yanjing Beer, Zhujiang Beer, and Huichuan Beer saw revenue increases of 3.2%, 6.56%, and 5.44%, respectively [2]. Market Challenges - The decline in on-the-go consumption channels, such as restaurants and bars, has significantly impacted beer sales [4][5]. - The average per capita consumption in the restaurant sector dropped to 39.8 yuan, a decrease of 6.6% year-on-year, with the beverage segment experiencing the most significant decline [4]. - High-end product sales are also under pressure, with Budweiser APAC's market share in the high-end segment falling from approximately 50% to 42% [5]. Strategic Shifts - Beer companies are shifting focus from traditional on-premise sales to new consumption scenarios, particularly instant retail, which is gaining traction [6][7]. - Instant retail for beer has seen significant growth, with a reported 83% increase in market size from 2020 to 2022 [6]. - Companies like China Resources Snow Beer and Tsingtao Brewery are exploring customized products and services to meet evolving consumer demands [6]. Future Trends - The competition in the beer industry is transitioning from channel acquisition to the exploration of consumer scenarios, especially in the high-end segment [7]. - The future development of the beer market is expected to focus on technology-driven high-end products and the capture of instant consumption scenarios [7].

Employment Changes - Budweiser APAC reduced its workforce from approximately 25,000 employees in 2023 to over 21,000 in 2024, resulting in a decrease of about 4,000 employees, which is a reduction rate of approximately 16% [1] - Yanjing Beer reduced its workforce by 1,440 employees, with total employees dropping from 21,405 in 2023 to 19,965 in 2024 [2][5] - China Resources Beer employed around 26,000 people in 2024, down from about 27,000 in 2023, a decrease of 1,000 employees [6] - Qingdao Beer saw a reduction of 817 employees, with total employees decreasing from 30,687 in 2023 to 29,870 in 2024, a reduction rate of 2.66% [8] Financial Performance - Budweiser APAC's beer sales in 2024 were 8.481 million kiloliters, a year-on-year decline of 8.8%, with revenue of $6.246 billion, down 7%, and normalized EBITDA of $1.807 billion, down 6.3% [2] - Yanjing Beer achieved beer sales of 4.0044 million kiloliters in 2024, a year-on-year increase of 1.57%, with revenue of 14.667 billion yuan, up 3.20%, and net profit attributable to shareholders of 1.056 billion yuan, up 63.74% [6] - China Resources Beer reported a total revenue of 38.635 billion yuan in 2024, a slight decline of 0.76%, with net profit attributable to shareholders of 4.739 billion yuan, down 8.03%, and a gross margin of 42.6%, which is an increase of 1.2 percentage points [8] - Qingdao Beer reported revenue of 32.138 billion yuan in 2024, a decrease of 5.3%, while net profit attributable to shareholders was 4.345 billion yuan, an increase of 1.81%, and net profit excluding non-recurring items was 3.951 billion yuan, up 6.19% [10]

Core Insights - The global beer industry is undergoing significant adjustments, with Budweiser APAC's 2024 financial report highlighting typical characteristics of this transitional period [1] - Despite a challenging environment, Budweiser APAC's Harbin Beer has shown positive transformation through product innovation and channel optimization [1] Financial Performance - Budweiser APAC's total revenue for 2024 decreased to $6.246 billion, reflecting a year-on-year decline [1] - Net profit fell by 14.8%, indicating pressure from market competition and fluctuating consumer conditions [1] Product Innovation - Harbin Beer’s zero-sugar product line experienced a remarkable growth of 122%, driven by collaborations with the NBA to engage younger consumers [1] - The introduction of the zero-sugar ice pure series has achieved a nationwide coverage of 85% in convenience stores, with a penetration rate of 19.3% among the 25-34 age group [3] Strategic Focus - Budweiser APAC plans to focus on core brands, specifically Budweiser and Harbin Beer, as part of its 2025 strategy [2] - The appointment of Cheng Yanjun as CEO signals a commitment to enhancing local decision-making efficiency and leveraging his technical background for supply chain optimization [3] Market Adaptation - Harbin Beer is actively adjusting its channel strategy to address the decline in traditional nightlife venues, with a 30% increase in sales of low-sugar, low-alcohol products expected by 2025 [4] - The brand is expanding its online sales, which have increased by 18%, and improving its convenience store presence with a 25% growth in the East China region [9] Cultural Integration - Harbin Beer is transforming its century-old industrial heritage into a cultural IP, utilizing tourism and product sales to enhance brand engagement [6] - The integration of industrial tourism with product sales, such as offering a beer case with museum entry, is creating new consumer touchpoints [6] Future Challenges - Harbin Beer must continue to seek breakthroughs in brand rejuvenation and value reconstruction to appeal to younger consumers [10] - The new CEO emphasizes the need for localized strategies to rebuild connections with consumers, focusing on product and channel innovation [10]

Financial Data and Key Metrics Changes - In the first quarter, total volumes and revenue decreased by 6.1% and 7.5% respectively, with revenue per hectoliter declining by 1.5% due to negative geographic and channel mix [8] - Normalized EBITDA decreased by 11.2%, and the normalized EBITDA margin contracted by 140 basis points [8] - In APAC West, volumes and revenue decreased by 8.6% and 11.7% respectively, with normalized EBITDA decreasing by 17.6% [8] - In China, volumes declined by 9.2%, and revenue declined by 12.7%, with revenue per hectoliter declining by 3.9% [9] Business Line Data and Key Metrics Changes - The in-home channel saw increased volume and revenue contributions, indicating a shift in consumer behavior towards in-home consumption [9] - Marketing investments for Budweiser and Harbin were increased to connect with consumers and drive market share [10] - In APAC East, volumes and revenues increased by 11.9% and 11.7% respectively, with normalized EBITDA increasing by 24.4% [11] Market Data and Key Metrics Changes - In South Korea, volume increased by double digits, supported by shipment phasing ahead of a price increase announced in April [12] - The company reported a decrease in cost of sales by 1.5% on a per hectoliter basis, driven by commodity tailwinds and cost management initiatives [13] Company Strategy and Development Direction - The company aims to adapt to evolving market conditions and focus on a winning brand portfolio, premium route to market, and a resilient team to drive sustainable growth [6] - The strategy remains focused on premiumization and digitalization, with an emphasis on market share and in-home channel growth [19][20] - The company is committed to expanding its route to market and enhancing distribution capabilities, particularly in the in-home channel [29] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence in China remains low, particularly in key regions, but there are positive indicators from upcoming holidays [17][18] - The company is closely monitoring the impact of tariffs in Guangdong but has not yet seen a significant shift in consumer behavior [44][45] - Future focus will be on executing the strategy effectively and adapting to market conditions as needed [46] Other Important Information - The company is leveraging technology to enhance commercial capabilities and drive value creation for stakeholders [10] - The partnership with Swire Coca-Cola is seen as a significant opportunity for growth in the in-home channel [85] Q&A Session All Questions and Answers Question: Update on Q2 performance in China - Management indicated that consumer confidence remains low, but there are positive signs from upcoming holidays, and pricing strategies will be considered based on market conditions [17][18] Question: Competition in Guangdong province - Management acknowledged the competitive landscape in Guangdong and emphasized the importance of expanding the Harbin brand and enhancing distribution in the in-home channel [25][26] Question: Core plus plus strategy and trade-up volume - Management explained that the core plus plus segment serves as an accessible upgrade for consumers, with a focus on product superiority and brand differentiation [36][38] Question: Impact of tariffs on consumer behavior in Guangdong - Management stated that it is too early to quantify the impact of tariffs, but they are monitoring the situation closely [44][45] Question: On-trade recovery in China - Management remains conservative about on-trade recovery, noting that consumer occasions are still growing in the in-home channel [53][54] Question: Cooperation with Swire Coca-Cola - Management reported positive outcomes from the partnership and expressed optimism for future collaboration in the in-home channel [85][86] Question: Competitive edge of Harbin Beer - Management highlighted Harbin's national brand status and cultural significance, along with ongoing premiumization efforts [91][92]

Financial Data and Key Metrics Changes - In Q1 2025, total volumes and revenue decreased by 6.1% and 7.5% respectively, with revenue per hectoliter declining by 1.5% due to negative geographic and channel mix [7][8] - Normalized EBITDA decreased by 11.2%, and the normalized EBITDA margin contracted by 140 basis points [7] - In APAC West, volumes and revenue decreased by 8.6% and 11.7% respectively, with normalized EBITDA decreasing by 17.6% [7][8] Business Line Data and Key Metrics Changes - In China, volumes declined by 9.2%, with revenue declining by 12.7% and revenue per hectoliter down by 3.9% [8] - The in-home channel saw increased volume and revenue contributions, indicating a shift towards premiumization in this segment [9] - In APAC East, volumes and revenues increased by 11.9% and 11.7% respectively, with normalized EBITDA increasing by 24.4% [11] Market Data and Key Metrics Changes - In South Korea, volume increased by double digits, supported by shipment phasing ahead of a price increase announced in April [12] - The company reported strong performance in the in-home channel, with a focus on expanding distribution and market share [30] Company Strategy and Development Direction - The company aims to adapt to evolving market conditions and execute with discipline to capture growth, focusing on market share, in-home channels, and mega brands like Budweiser and Harbin [5][20] - The strategy emphasizes premiumization and a digitalized ecosystem, with a commitment to optimizing business operations [20][76] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence in China remains low, impacting sales, particularly in Guangdong, but sees potential for improvement during holiday periods [17][56] - The company is focused on executing its strategy effectively, with an emphasis on enhancing distribution and expanding the in-home channel [49] Other Important Information - The company has increased marketing investments for Budweiser and Harbin to connect with consumers and drive market share [10] - The usage and reach of the BEES platform for B2B wholesaler and customer engagement continued to expand, indicating a focus on technology and commercial capabilities [11] Q&A Session Summary Question: Update on Q2 performance in China - Management indicated that consumer confidence remains low, particularly in key regions, but sees potential for improvement during holiday periods [17] Question: Competition in Guangdong province - Management acknowledged the competitive landscape in Guangdong and emphasized the importance of expanding in-home coverage and distribution to maintain market share [30] Question: Core plus plus strategy and trade-up volume - Management explained that the core plus plus segment serves as an accessible upgrade for consumers, with a focus on superior product offerings to drive growth [39] Question: Impact of tariffs in Guangdong - Management stated it is too early to quantify the impact of tariffs on consumer behavior but emphasized focusing on execution and adapting strategies as needed [46] Question: On-trade recovery in China - Management remains conservative about on-trade recovery, noting that consumer confidence is a key factor and that in-home consumption continues to grow [56] Question: Cooperation with Swire - Management highlighted successful trials in Hubei and Anhui provinces and expressed optimism about future collaboration opportunities [86] Question: Future of Harbin Beer - Management emphasized Harbin's unique position as a national brand with a strong heritage and commitment to premiumization, aiming to leverage its brand power for growth [92]

| | 2025年 | 2024年 | | | --- | --- | --- | --- | | | 第一季度 | 第一季度 | ワ | | 總銷量(十萬公升) | 19,741 | 21.115 | | | 收入 | 1.461 | 1.643 | | | 毛利 | 745 | 846 | | | 毛利率 | 51.0% | 51.5% | | | 正常化除息稅折舊攤銷前盈利² | 485 | 572 | | | 正常化除息稅折舊攤銷前盈利率 | 33.2% | 34.8% | -14 | | 正常化除息税前盈利 | 331 | 408 | | | 正常化除息稅前盈利率 | 22.7% | 24.8% | -18 | | 百威亞太股權持有人應佔溢利 | 234 | 287 | | | 百威亞太股權持有人應佔正常化溢利 | 235 | 297 | | | 正常化每股基本盈利(以美分計 )3 | 1.78 | 2.26 | | 第一季度毛利率51％，预估50.3％。 第一季度调整后息税折旧及摊销前利润4.85亿美元，预估4.98亿美元。 第一季度调整后息税前利润3.31亿美元，预估3.431亿美元。 百威亚太 ...

Sales Performance - Total sales volume for Q1 2025 was 19,741 million liters, a decrease of 6.1% compared to Q1 2024[13] - In Q1 2025, sales volume in China decreased by 9.2%, with inventory management measures accounting for approximately 25% of the decline[16] - Total sales volume for Q1 2025 decreased by 6.1% to 19,741 thousand liters compared to Q1 2024[39] - In the Asia-Pacific region, sales volume in the eastern region increased by 11.9% year-over-year, while the western region saw a decline of 8.6%[43] Revenue and Profitability - Revenue for Q1 2025 was $1,461 million, down 7.5% from $1,643 million in Q1 2024[8] - Revenue in China fell by 12.7%, while revenue per hundred liters decreased by 3.9%[16] - Total revenue for Q1 2025 was $1,461 million, compared to $1,643 million in Q1 2024, reflecting a decline of 11.1%[42] - Normalized net profit attributable to equity holders was $235 million, down from $297 million in Q1 2024[10] - The net profit for Q1 2025 was $242 million, down from $293 million in Q1 2024, representing a decrease of 17.4%[42] EBITDA and Operating Profit - Normalized EBITDA for Q1 2025 was $485 million, reflecting an 11.2% decrease from $572 million in Q1 2024[9] - Normalized EBITDA decreased by 17.1% due to revenue performance and operational deleveraging[16] - Normalized EBITDA for Q1 2025 dropped by 14.4% to $331 million, down from $408 million in Q1 2024[39] - The normalized operating profit (EBIT) for Q1 2025 was $331 million, compared to $408 million in Q1 2024, a decline of 18.9%[42] Cost and Margin Analysis - Cost of sales for Q1 2025 was $716 million, a reduction of 7.5% compared to the previous year[6] - The gross profit margin for Q1 2025 was 51.0%, slightly down from 51.5% in Q1 2024[13] - The normalized EBITDA margin for Q1 2025 was 33.2%, down 140 basis points from 34.8% in Q1 2024[39] - The company reported a normalized operating margin of 33.2% for Q1 2025, down from 34.8% in Q1 2024[42] Market Challenges and Strategies - The company faced challenges in the Chinese market due to unfavorable regional and channel mix, impacting sales performance[12] - The company remains focused on its brand portfolio, marketing channels, and agile team to navigate the current market environment[5] - The company launched a new packaging design for Budweiser in March 2025 to attract a new generation of adult consumers[16] - In Q1 2025, the sales of zero-sugar Harbin Ice Pure increased by approximately 70%, connecting with health-conscious young adults[16] - The company’s marketing resources were increased for Budweiser and Harbin to strengthen brand power and market share[16] Financial Overview - The financial data presented is normalized to exclude the effects of currency conversion and scope changes related to acquisitions and divestitures[38] - The financial performance metrics are based on internal records and are not independently audited[38] - The effective tax expense for Q1 2025 was $95 million, compared to $117 million in Q1 2024, indicating a reduction in tax burden[42] Company Background - The company operates in two geographical segments: Eastern Asia Pacific (mainly Korea, Japan, and New Zealand) and Western Asia Pacific (China, India, Southeast Asia, and exports)[41] - The company employs over 21,000 staff across 47 breweries in the Asia Pacific region[36] - The company is a subsidiary of Anheuser-Busch InBev, which has over 600 years of brewing history[36]

Core Insights - The beer market is experiencing intensified competition as it enters a phase of stock competition, with contrasting performance driven by events like the European Cup and the Paris Olympics, alongside adverse weather and weak recovery in dining demand [1][3] - The overall beer industry remains highly fragmented, with major players like Budweiser APAC, China Resources Beer, Tsingtao Brewery, and Yanjing Beer generating over 150 billion yuan in total revenue, while smaller companies struggle with revenues below 1.3 billion yuan [1][3] Industry Performance - In 2024, the beer industry in China saw a 0.6% decline in production among large-scale enterprises, with industry revenue decreasing by 5.7%, marking it as the only category in the food and beverage sector to experience a revenue drop [3][8] - Major companies such as Budweiser APAC, Tsingtao Brewery, and China Resources Beer reported revenue declines of 8.8%, 5.3%, and 2.45% respectively, while Yanjing Beer and Zhujiang Beer managed to achieve revenue growth [3][10] Financial Results - Among the six major beer companies, Budweiser APAC, China Resources Beer, and Chongqing Beer all faced declines in both revenue and net profit, while Tsingtao Brewery saw a slight increase in net profit despite a revenue drop [5][6] - Yanjing Beer and Zhujiang Beer reported significant growth in both revenue and net profit, with Yanjing's net profit increasing by 63% [5][6] Q1 2025 Performance - In Q1 2025, major beer companies showed resilience with revenue and net profit growth, particularly Yanjing Beer, which achieved a net profit increase of over 60% [13][14] - Qingdao Beer led in revenue with approximately 10.446 billion yuan, while Zhujiang Beer had the highest revenue growth rate at 10.69% [14][16] Market Trends - The beer market is shifting towards high-end products, with companies focusing on premium offerings to attract consumers [15][17] - Yanjing Beer has launched new beverage products, indicating a strategic move towards diversification and tapping into the beverage market [17][18] - Qingdao Beer is also exploring beverage integration through its strategic merger with Qingdao Beverage Group, enhancing its product offerings and market reach [19]

Industry Overview - The beer industry in 2024 is experiencing a significant divergence, with some companies thriving while others struggle, reflecting a structural adjustment within the market [2][3] - The National Bureau of Statistics reported a 0.6% year-on-year decline in beer production and a 5.7% decrease in industry revenue, making beer the only category in the food and beverage sector to see a revenue drop [2] Market Dynamics - The Chinese beer market is characterized by oligopolistic competition, with the top six companies (CR6) holding a market share of 92.6% [3] - Beer production has been declining since its peak in 2013, leading to a contraction in the overall consumption market, which directly impacts the performance of leading companies [3] Financial Performance - Major companies like Budweiser APAC, China Resources Beer, and Tsingtao Brewery reported revenue declines of 8.89%, 0.76%, and 5.3% respectively in 2024 [4][5] - Net profits for Budweiser APAC, China Resources Beer, and Chongqing Beer also fell by 14.8%, 8.03%, and 17.05% respectively, attributed to weak consumer demand and challenges in traditional sales channels [4][5] Growth Segmentation - Yanjing Beer and Zhujiang Beer are exceptions, showing positive growth in both revenue and profit, with Yanjing's revenue increasing by 3.20% and net profit by 54.87% [5] - Yanjing U8 has successfully penetrated the mid-to-high-end market, achieving a 31.40% increase in sales volume [6] Strategic Shifts - Companies are shifting focus towards operational efficiency and market segmentation to find sustainable profit growth in a saturated market [8][9] - Budweiser APAC is reallocating resources from super-premium products to the core price segment of 8-10 yuan, which is performing better in the current consumption environment [7][8] Cost Management - Several companies, including Budweiser APAC and China Resources Beer, have reduced their sales costs by 8.93% and 2.93% respectively, due to lower barley prices and improved cost control measures [9][10] - Qingdao Beer managed to achieve a slight net profit increase despite revenue decline by reducing various operational costs [10][12] Marketing Innovations - Companies are adopting innovative marketing strategies to engage younger consumers, such as emotional and scenario-based marketing [13][14] - Budweiser APAC is focusing on expanding non-drinking channels and targeting new consumption scenarios, while China Resources Beer has seen over 30% growth in online business [15][16]