Core Insights - The beer industry in China is facing significant challenges due to a decline in on-the-go consumption, decreasing contributions from traditional channels, and a reduction in alcohol consumption willingness [1] - The overall production of beer has decreased, with major companies experiencing performance pressures, leading to a noticeable market segmentation [1] Industry Performance - Budweiser APAC reported a total beer sales volume of 4.363 billion liters in the first half of 2025, a year-on-year decline of 6.1%, with revenue at $3.136 billion, down 5.6% [2] - In China, the sales volume decreased by 8.2%, with revenue and revenue per hectoliter dropping by 9.5% and 1.4%, respectively, leading to a market share decline to around 40% [2] - The cumulative production of large-scale beer enterprises in China reached 35.213 million kiloliters in 2024, a decrease of 0.6% from the previous year, only about 70% of the peak level ten years ago [2] Regional Market Dynamics - Local brands like Yanjing Beer and Chongqing Beer have shown strong competitiveness through product innovation and marketing strategies, solidifying their market share [2] - Some brands exhibit significant regional dependency, with one brand generating nearly 70% of its revenue from Shandong, while another brand has over 60% of its revenue from Chongqing, Chengdu, and Sichuan [2][3] Growth Strategies - To achieve further growth, brands need to deepen their regional market strategies, focusing on both consolidating their positions in existing strongholds and exploring new growth points [3] - A brand successfully avoided direct competition with eastern giants by acquiring local brands in Yunnan, focusing on the western market [3] High-End and Differentiation Strategies - High-end product strategies have shown mixed results, with some brands experiencing a decline in revenue despite a high proportion of mid-to-high-end products [4] - Conversely, certain brands have achieved significant growth in high-end product revenue, with one brand's mid-to-high-end product revenue share exceeding 70% and a year-on-year increase of 9.32% [4] Consumer Trends - The demand for cost-effective beer has resurged, with low-priced products gaining traction among consumers, particularly in the context of slowing income growth among migrant workers [6] - Brands are encouraged to adjust their product strategies to focus on value for money, optimizing production processes to lower costs while maintaining quality [6][7] Diversification and Innovation - Some brands are exploring diversification by entering new beverage categories, such as acquiring stakes in yellow wine and launching soft drinks [9] - The Z generation, aged 18-24, is becoming a significant consumer group, with their preferences shifting towards emotional value and experiences rather than traditional drinking culture [9] Channel Transformation - The beer sales channel is undergoing structural changes, with the share of on-the-go channels declining from over 50% to about 40%, while non-on-the-go channels like convenience stores are growing [13] - Brands are encouraged to collaborate with convenience stores and leverage e-commerce to enhance sales, with instant retail platforms showing significant growth potential [14] Operational Efficiency and Sustainability - Improving operational efficiency is crucial for long-term success, focusing on production, supply chain, and decision-making processes [15] - Brands are increasingly adopting sustainable practices, with some reducing their carbon footprint significantly, which is becoming a key factor for consumer preference [15][16] Market Outlook - The beer industry has experienced a downturn over the past two years but shows signs of potential recovery, although uncertainties remain due to high-end market segmentation and channel transformations [16]