Core Viewpoint - Budweiser APAC reported a decline in revenue and net profit for the first half of 2025, indicating challenges in the beer market, particularly in China, while showing signs of marginal improvement in the second quarter [1][2]. Financial Performance - For the first half of 2025, Budweiser APAC's revenue was $3.136 billion, a decrease of 5.6% year-on-year; net profit was $409 million, down 24.4%; total sales volume was 4.363 billion liters, a decline of 6.1% [1]. - The second quarter showed a smaller revenue decline of 3.9% compared to a 7.5% decline in the first quarter, indicating a trend of marginal improvement [1]. - Average revenue per hectoliter increased by 0.5% year-on-year for the first half, with a 2.4% increase in the second quarter, contrasting with a 1.5% decline in the first quarter [1]. Regional Performance - In China, sales volume decreased by 8.2% and revenue by 9.5% in the first half, with a 7.4% decline in sales volume and a 6.4% decline in revenue in the second quarter [2]. - The Indian market experienced double-digit growth in revenue and sales volume for high-end products, continuing to drive overall growth [2]. - In South Korea, sales volume showed a high single-digit decline, while revenue also decreased significantly due to reduced sales volume, although average revenue per hectoliter saw low single-digit growth [2]. Inventory Management - Inventory adjustment was a key operational focus for Budweiser APAC in the first half, with proactive measures taken to align inventory levels with market conditions [3]. - The company reported lower inventory levels and days compared to the previous year, indicating effective inventory management [3]. Strategic Focus - The new CEO and sales leadership are undergoing structural and strategic adjustments, facing challenges in channel transformation, management efficiency, and external risks [3]. - The company plans to focus on controllable areas, increasing investment in brands like Budweiser and Harbin, while expanding non-immediate consumption channels and enhancing execution [3]. - Analysts suggest that the company may see marginal recovery in the Chinese market in the second half, but emphasize the need for time to build brand influence and establish non-immediate consumption channels [3].

Group 1: Market Trends - The beer market is thriving as consumer preferences shift from traditional spirits like baijiu to beer, especially among younger generations born in the 1990s and 2000s [1][6][8] - The overall sales of high-end baijiu have significantly declined, with some retailers reporting daily revenues dropping from tens of thousands to just over a hundred yuan [2][3] - The white liquor market is experiencing a downward trend, with production volume decreasing from 13.58 million kiloliters to 4.145 million kiloliters, a cumulative decline of 69.5% from 2016 to 2024 [3][4] Group 2: Consumer Behavior - Consumers are increasingly favoring lower-priced baijiu options, with a notable shift towards self-consumption and family-oriented drinking rather than business-related consumption [3][4][5] - The most popular price range for baijiu is now between 100 to 300 yuan, reflecting a preference for affordable options among consumers [4][5] - The trend of home drinking has led to a rise in the popularity of "staple liquor," with consumers purchasing in bulk for personal use [7][8] Group 3: Industry Dynamics - The beer industry is seeing a robust growth trajectory, with major brands capturing approximately 70% of the market share, and companies like Yanjing Beer reporting a 94.3% increase in net profit [6][8] - The market for craft and specialty beers is expanding, driven by younger consumers' desire for diverse and innovative options [6][8] - The competitive landscape of the beer market is solidifying, with leading brands maintaining stable growth in sales, revenue, and net profit [6][8]

Core Viewpoint - Budweiser APAC is facing significant challenges as evidenced by declining sales, revenue, and net profit in both the first quarter of 2025 and the full year of 2024, indicating pressure on the company's growth strategy [1][4][5] Financial Performance Summary - In Q1 2025, total sales volume was approximately 1.974 billion liters, a decrease of 6.1% year-on-year; revenue was $1.461 billion, down 7.5%; gross profit was $745 million, also down 7.5%; and net profit was $234 million, reflecting an 18.47% decline [1] - For the full year 2024, revenue was $6.246 billion, a decline of 8.9%; net profit was $750 million, down 14.77%; and sales volume was 8.48 billion liters, a decrease of 8.8% [1] - The stock price of Budweiser APAC has dropped over 40% since 2024, currently trading just above 8 HKD [1] Market Dynamics - The Chinese market is crucial for Budweiser APAC, contributing over 75% of revenue in 2022, but has recently shown a "volume and price drop" due to weak domestic beer consumption [2] - In 2024, the Chinese market saw a sales volume and price decline of 11.8% and 1.4% respectively, with a market share decrease of 1.49 percentage points [2] - Conversely, the Indian market has shown strong growth, with revenue growth close to 20% in both 2024 and Q4, positioning it as one of the top four global markets for the company [2] Competitive Landscape - Budweiser APAC's high-end market share in China has declined from nearly 50% in 2015 to around 40% currently, as local brands gain market share [6] - The competition in the high-end beer segment has intensified, particularly in the 8 RMB price range, which has become a key battleground for market share [7][8] - The overall beer production in China decreased by 0.6% in 2024, while the high-end beer market is expected to reach 280 billion RMB, accounting for 40% of the total market [8] Strategic Adjustments - The new CEO, Cheng Yanjun, is focusing on strengthening the Budweiser and Harbin beer brands and optimizing supply chains while deepening local market engagement [6][10] - Budweiser APAC is shifting its strategy to include more competitive pricing in the 8-10 RMB range to enhance its market position [8][9] - Future strategies will likely involve product innovation, channel diversification, and enhanced supply chain efficiency to address the challenges posed by local brands and changing consumer trends [9][10]