In the context of the slowdown in the overall growth rate of my country’s beer industry in recent years and the increasingly fierce competition in the industry, some beer companies have begun to explore the path of cross-border development and enter the liquor market, so as to achieve a diversified layout and increase market share.
Pearl River Beer: First proposed liquor format cultivation
Realizing the limitations of its own development, Pearl River Beer began to expand its territory in other fields. In the recently released 2021 annual report, Pearl River Beer stated for the first time that it would speed up the cultivation of the liquor format and make incremental breakthroughs.
According to the annual report, in 2021, Pearl River Beer will promote the liquor project, explore new formats for the integrated development of beer business and liquor business, and achieve sales revenue of 26.8557 million yuan.
Beer giant China Resources Beer announced in 2021 that it plans to enter the liquor business by investing in Shandong Jingzhi Liquor Industry. China Resources Beer said that this move is conducive to the group’s potential follow-up business development and the diversification of product portfolio and revenue sources. The announcement of China Resources Beer sounded the clarion call for the official entry into liquor.
Hou Xiaohai, CEO of China Resources Beer, once said that China Resources Beer has formulated a strategy for the diversified development of alcohol during the “14th Five-Year Plan” period. Liquor is the first choice for the diversification strategy, and it is also one of China Resources Snow Beer’s efforts in the first year of the “14th Five-Year Plan”. strategy.
For the China Resources Department, this is not the first time it has touched the liquor business. At the beginning of 2018, Huachuang Xinrui, a subsidiary of China Resources Group, became the second largest shareholder of Shanxi Fenjiu with an investment of 5.16 billion yuan. Many executives of China Resources Beer entered the management of Shanxi Fenjiu.
Hou Xiaohai pointed out that the next ten years will be a decade of liquor quality and brand development, and the liquor industry will usher in new development opportunities.
In 2021, Jinxing Beer Group Co., Ltd. will undertake the exclusive sales agent of the century-old wine “Funiu Bai”, realizing dual-brand and dual-category operation in low and peak seasons, taking a solid step for Jinxing Beer Co., Ltd. to successfully go public in 2025.
From the perspective of the beer market structure, under the huge competitive pressure, companies should focus on their main business. Why are more and more companies aiming to diversify products such as liquor?
Tianfeng Securities Research Report pointed out that the market capacity of the beer industry is close to saturation, the demand for quantity has transitioned to the demand for quality, and the upgrading of product structure is the most sustainable long-term solution for the industry.
In addition, from the perspective of alcohol consumption, the demand is very diverse, and traditional Chinese liquor still occupies the mainstream of consumers’ wine table.
Finally, beer companies have another purpose in entering liquor: to increase profits. The biggest difference between the beer and liquor industries is that the gross profit is very different. For high-end liquor such as Kweichow Moutai, the gross profit rate can reach more than 90%, but the gross profit rate of beer is about 30% to 40%. For beer companies, the high gross profit margin of liquor is very attractive.