---
title: "Brands Raise Prices, Terminals Discount: How Hard Is It for Domestic Beer to Actually Raise Prices?"
description: "As temperatures rise and beer enters its peak sales season, Beijing Business Today reporters found that domestic beer brands have launched promotional campaigns before the peak season. Despite collective price increases by Yanjing, Tsingtao, and Snow at the beginning of the year, terminal discounts remain significant, reflecting the difficulty of real price hikes amid years of declining sales and profits."
author: "薛晨"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2018-05-10"
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# Brands Raise Prices, Terminals Discount: How Hard Is It for Domestic Beer to Actually Raise Prices?

> As temperatures rise and beer enters its peak sales season, Beijing Business Today reporters found that domestic beer brands have launched promotional campaigns before the peak season. Despite collective price increases by Yanjing, Tsingtao, and Snow at the beginning of the year, terminal discounts remain significant, reflecting the difficulty of real price hikes amid years of declining sales and profits.

As temperatures rise, beer is gradually entering its peak sales season. Before the peak season, reporters from Beijing Business Today visited several supermarkets in the capital and found that domestic beer brands have already entered a promotional war. Notably, at the beginning of this year, domestic beer companies including Yanjing, Tsingtao, and Snow collectively raised prices. However, compared with the promotional war at the terminal market, both the previously announced price increases by Snow, Tsingtao, and Yanjing, as well as other domestic brands, still show significant discount rates. In fact, the continuous decline in beer sales revenue and profits over the years has made it particularly difficult for beer brands to achieve real price increases. Industry insiders believe that in the face of a shrinking market, the beer industry is becoming more concentrated, and banding together seems to be the main way to counter declining performance.

Promotional War Before Peak Season
In the market, as the beer sales peak season approaches, discount information from major beer brands is emerging one after another. Beijing Business Today reporters visited several supermarkets in Beijing. At the Puhuangyu Wumei supermarket, the Harbin Beer series launched multiple promotions. The lower-end Harbin Chunshuang 500ml whole box was priced at 25 yuan, equivalent to 2.09 yuan per can, compared with the manufacturer's suggested price of 2.99 yuan. For Tsingtao Beer Bingchun series, the shelf price was 5 yuan, with a bulk purchase discount of 0.5 yuan per bottle.

Promotions on e-commerce platforms are even more straightforward. Taking Tsingtao Beer's Tmall official flagship store as an example, Tsingtao Classic Beer 500ml×24 cans was originally priced at 140 yuan, now 109 yuan; Tsingtao Pure Draft 500ml×12 cans was originally 130 yuan, now slashed to 69 yuan; Tsingtao's high-end beer also underwent large-scale promotions, with Tsingtao August 330ml×24 cans reduced from 290 yuan to 119 yuan. Yanjing Beer's official flagship store sold 10-degree fresh beer 500ml×12 cans, with two boxes bundled at 240 yuan reduced to 136 yuan, also giving away Yanjing pineapple beer; Yanjing 11-degree blue can yellow beer 330ml×24 cans was also sold in two-box bundles, with the price reduced from 198 yuan to 155 yuan. In Snow's official store, 8-degree canned Brave the World 330ml×24 cans had a limited-time discount price of 87 yuan, previously shown as 96 yuan; Snow Pure Draft 500ml×12 cans also had a limited-time discount, also reduced from 96 yuan to 87 yuan; and the product with the largest discount, Snow Facial Makeup 500ml×12 cans, was promoted at 180 yuan, a drop of about one-third from the original price of 300 yuan.

Beijing Business Today reporters noted that current promotions by various beer brands in supermarkets and e-commerce platforms mostly use the barbecue season as a gimmick. Sales staff also said that with the peak season approaching, based on past experience, the current promotions are just the beginning. As the weather turns hot, more beer-related promotional activities will be carried out.

Price Increase Strategy Becomes Empty Talk
The lively promotional discounts in the beer market remind people of the beer price increase wave that attracted much industry attention earlier. At the beginning of 2018, China Resources Snow, Tsingtao Beer, AB InBev, and Yanjing Beer, which hold leading shares in the Chinese beer market, announced price increases of about 5%-10%. China Resources Snow even explicitly wrote in its future plans in its financial report: "moderately adjust product prices in certain regions to alleviate the pressure of expected cost increases such as raw materials, packaging, and labor costs." Subsequently, Harbin Beer also reported a price increase in April.

In fact, many terminal supermarkets have not yet reflected actual price increases. Taking a medium-sized supermarket in Lujiaying visited by Beijing Business Today reporters as an example, when the price increase news broke, the suggested retail price of Snow Brave the World 500ml white bottle in traditional channels was adjusted to 4.5 yuan per bottle, but the supermarket's shelf price still showed 3.9 yuan per bottle. With the large-scale promotional activities during the beer peak season, the impact of this round of price increases seems negligible. Single-digit increases are insignificant compared with discounts that are sometimes nearly half off. There seems to be a contradiction between price increases and discounts, and some even regard this round of beer price increase strategy as empty talk.

However, Zhu Danpeng, a commentator on China's food industry, holds a different view. He believes that beer price increases and peak-season discounts are not contradictory. The previous price increases were due to cost issues and the competitive environment of the entire beer market. Once the gate for price increases is opened, if any company does not follow, it means that the company is not on the same starting line in competition, including the subsequent promotional base prices will not be on the same level.

Trapped in a Price War
Regardless of how the effect of price increases is reflected, the promotional activities clearly align more with society's expectations for the beer market. In random interviews with consumers conducted by Beijing Business Today reporters, it was also learned that, apart from a few consumers who have a preference for specific beer brands due to sentiment, the price of beer products of the same grade remains the primary factor in consumer choice.

Zhu Danpeng believes that the reason domestic beer companies cannot avoid promotions is the lack of a liquor culture foundation and "loyal" consumer groups like those for baijiu. Some viewpoints suggest that in addition to rising labor and material costs, companies have overemphasized market share for years while neglecting brand culture construction and cultivation. In the later stage of excessive competition, insufficient attention to category culture has made it difficult for the beer industry to form a stable customer base.

More importantly, the reduction in beer consumers puts beer manufacturers in a more passive position. Data shows that the beer consumer market has declined for four consecutive years, with a cumulative decline of 15% from 2013 to 2017, and consumption volume down 12.2%. At the same time, the choices of substitutes for beer, including foreign liquor, premixed drinks, and even beverages, are increasing. Imported beer has aggressively entered the already fiercely competitive Chinese market, putting more pressure on domestic beer companies that have already adopted a low-profit, high-volume strategy, forcing them to resort to promotional "tricks" again to increase sales volume.

Source: Cup of Wine Life


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