From IPO setbacks to internal pressure, Budweiser APAC's recent development path has been nothing short of dramatic. However, despite facing internal and external challenges, Budweiser APAC has managed to stage a remarkable comeback thanks to its premium positioning. ****According to its 2021 financial report, Budweiser APAC (01786.HK) achieved revenue of $6.788 billion, up 14.9% year-on-year, and net profit of $980 million, up 84.8%. The announcement showed that premium and above-premium product sales achieved double-digit growth across all major markets, driven by positive packaging and brand mix. Jan Craps, CEO of Budweiser APAC, also stated that due to strong demand for limited-edition beer gift sets priced above 1,500 yuan, the company plans to promote more premium beers in China. Currently, Budweiser APAC holds over 45% share of China's premium and super-premium beer market. However, as the saying goes, "He who has no long-term worries will have immediate concerns." Budweiser APAC's premium positioning may seem unmatched, but in the turbulent beer industry, is its position as the "leader" truly unshakable? ****The Ups and Downs of Budweiser APAC **On September 30, 2019, Budweiser APAC, known as the "giant" of the beer industry, listed in Hong Kong, but the process was not smooth. When it first launched its IPO in July, it was canceled due to insufficient subscription. At the same time, the manufacturer, which sells 160,000 tons of beer a day, also faced controversy due to its debt of $102.5 billion. According to the prospectus, as of July 31, 2019, Budweiser APAC had net current liabilities of $2.39 billion. Liabilities of 5 years or more were $54 million, 1-2 years were $310 million, and less than 1 year were $200 million. These debts were largely incurred when Budweiser APAC's parent company, Anheuser-Busch InBev, acquired stakes in other beer brands. According to media reports, Budweiser APAC used the net proceeds from its global offering to fully repay loans owed to subsidiaries of the Budweiser Group to complete restructuring. This shows that even after a successful listing, Budweiser APAC cannot escape deep ties with its parent company, and the revenue of the subsidiary remains a mystery. Shortly after Budweiser APAC's listing, the pandemic dealt a heavy blow to all industries, and for Budweiser APAC, it turned into a "joint letter of no confidence." On April 7, employees of Budweiser APAC issued a joint letter impeaching Jan Craps, claiming he was inactive during the pandemic and opposing the company's plan to grant options worth 49.72 million and restricted stock allocations worth 16.08 million to Craps and others. However, Craps responded optimistically, using the opportunity to give frontline employees a 10% pay raise. Looking back at Budweiser APAC's performance at that time, under siege from competitors like China Resources Beer and Tsingtao Brewery, Budweiser APAC relied too heavily on premium positioning, resulting in market share erosion and declines in revenue, net profit, and sales volume. Financial reports show that in 2019, Budweiser APAC generated revenue of $6.546 billion, down 2.88% year-on-year, and full-year net profit of $908 million, down 5.32%, with sales volume totaling 9.317 billion liters, down 3.0% from the previous year. Under the impact of the pandemic, Budweiser APAC had a poor start in 2020, with revenue and net profit still declining in the first three months. It can be said that its success was due to premium positioning, and its failure was also due to it. Now, with significant growth in performance, Budweiser APAC naturally cannot focus solely on premium. Budweiser APAC's Real Intent Is Not in Beer **Budweiser APAC is indeed a long-established beer brand, currently owning international brands such as Budweiser, Corona, Modelo, Beck's, Hoegaarden, and Leffe, as well as local brands like Harbin, Sedrin, Goose Island, Daxue, and Nanchang. However, as it has developed, Budweiser APAC's real intent is no longer just beer. After disclosing its third-quarter report, Craps also said in an interview: "Budweiser APAC's revenue growth in the first three quarters of 2021 was mainly driven by the Chinese market. This is closely related to our strategic focus on premiumization, digital transformation, and commercial expansion in the Chinese market. In the future, Budweiser APAC's investment in China will continue to focus on these three key areas." From the financial report, we can see that Budweiser APAC's surge in net profit is inseparable from the linkage of multiple brands. Driven by Budweiser and Budweiser Gold, the Budweiser brand achieved double-digit growth in the market. Harbin Beer achieved consumption upgrade from core and affordable brands to "core+ brands," with single-digit sales volume growth. In addition, Corona, Blue Girl, and Hoegaarden drove double-digit growth in the super-premium market. At the same time, Budweiser APAC has also succeeded in accelerating digital transformation, planning to expand its B2B platform to 10 cities in the first half of 2022 and to 60 cities by the end of the year, while pursuing a de-singularization strategy. The Turbulent Beer World **After years of fierce competition, the beer market landscape is almost clearly defined: China Resources Beer dominates the southwest, Anhui, Liaoning, and Zhejiang; Tsingtao Brewery controls Shandong and Shaanxi; Yanjing Beer occupies Guangxi, Beijing, and Inner Mongolia; and Budweiser's main strongholds are Jiangxi, Hubei, and Fujian. However, these beer brands still scheme against each other, trying to expand their territories. What are Budweiser's chances? According to China International Beer Network data, in 2020, China's beer companies produced a cumulative 34.1111 million kiloliters, down 7.04% year-on-year. In 2021, cumulative production was 35.624 million kiloliters, up 5.6% year-on-year. Furthermore, in 2020, the market share of the top five domestic beer companies reached 73%, with enterprise share reaching 65%. As premiumization becomes a mainstream trend in beer, Tsingtao Brewery and China Resources Beer have also begun to focus on the premium segment. Tsingtao Brewery is focusing on premium products like pure draft and white beer, and will upgrade brands like Laoshan. China Resources Beer, on the other hand, has entered the premium track through independent R&D of new premium products and the acquisition of international brands like Heineken. In this same arena, the outcome is still uncertain. However, despite many beer brands entering the premium track, Budweiser APAC still holds a dominant position in the super-premium segment, and other brands are unlikely to catch up in the short term. Speaking of the beer market landscape, Tsingtao Brewery's general manager, Peng Zuoyi, joked: "Wolves in front, tigers behind, and a group of little mice in the middle." Here, wolves represent foreign giants, tigers represent Chinese beer companies, and little mice are small and medium-sized beer brands. Now, under the siege of multiple local brands, how long can Budweiser APAC continue to lead with its premium positioning? -END-