China Resources Beer holds 12.3 billion shares of Jinsha Liquor Industry, and Chongqing Beer said that it will not rule out its future involvement in liquor, which once again triggered a hot topic of beer’s cross-border extension of the liquor industry.
So, is the beer giant’s embrace of the liquor industry because the liquor is too fragrant, or is the cross-border beer brand intentional?
At present, the development of the beer industry is relatively mature, and the market competition is relatively fierce. Especially after 2013, the production and sales of my country’s beer industry peaked and declined, entering the era of stock competition.
Industry insiders said that although the current beer and liquor industries have entered the era of stock competition, and the trend of industry differentiation is becoming more and more obvious. However, compared with the beer industry, the category premium of liquor is high, the unit price is also higher, and the profit is also very rich.
The fact that some beer companies expand their liquor business to boost their overall profitability may be one of the reasons why beer brands choose to embrace liquor.
At the same time, from the perspective of product life cycle, liquor has no shelf life. Under the blessing of old wine and other concepts, liquor is indeed a relatively high-quality category.
In addition, beer pays more attention to freshness and turnover efficiency, while liquor products do not expire, the longer the time, the more fragrant they are, and the gross profit margin is high. For beer companies, cross-border liquor can release the largest marginal effect of the sales network and achieve complementarity in low and peak seasons needs.
As a leader in the beer industry, China Resources Beer believes that in the current competitive landscape of the beer industry, it is difficult to rely solely on the category of beer to achieve growth, and finding a new track is the top priority.
China Resources Beer believes that entering the Chinese liquor market is conducive to its potential follow-up business development and diversification of its product portfolio and revenue sources. China Resources Beer hopes to establish some non-beer brands and businesses, and promote China Resources Beer to become a listed company with dual-track development of beer and non-beer.
Under this circumstance, the development of the liquor market is undoubtedly a diversification attempt by beer companies, and it is also to seek business increment.
Beer cross-border liquor is not an exception. In fact, many companies have squeezed into the liquor track one after another.
Pearl River Beer’s 2021 annual report pointed out that Pearl River Beer plans to accelerate the cultivation of liquor formats and promote incremental breakthroughs.
Zhang Tieshan, chairman of Jinxing Beer, proposed that from 2021, Jinxing Group has opened a road of diversification, with a large industrial pattern of “brewing + cattle raising + building houses + entering liquor”. In 2021, by undertaking the exclusive sales agent of the century-old wine “Funiu Bai”, Venus Beer will realize dual-brand and dual-category operations in the off-season and peak seasons, laying a solid foundation for its listing in 2025.
With the continuous entry of beer brands, the pace of beer “whitening” is gradually moving forward. This situation will become more and more common, and more beer companies may embark on this development path in the future.