---
title: "Budweiser China's Revenue and Profit Both Decline as High-End Market Faces Siege from Three Giants"
description: "On February 25, beer giant Anheuser-Busch InBev (AB InBev) released its 2020 annual results, showing total revenue of $46.881 billion, down 10.4% year-on-year, and net profit of $1.405 billion, down 84.68%. Budweiser APAC also reported a 12.4% revenue decline to $5.588 billion, with China's market recovering in Q3 and Q4 but facing intense competition in the high-end segment from Tsingtao, Snow, and Carlsberg."
author: "陈思廷 陈峰"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2021-02-27"
language: "en"
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# Budweiser China's Revenue and Profit Both Decline as High-End Market Faces Siege from Three Giants

> On February 25, beer giant Anheuser-Busch InBev (AB InBev) released its 2020 annual results, showing total revenue of $46.881 billion, down 10.4% year-on-year, and net profit of $1.405 billion, down 84.68%. Budweiser APAC also reported a 12.4% revenue decline to $5.588 billion, with China's market recovering in Q3 and Q4 but facing intense competition in the high-end segment from Tsingtao, Snow, and Carlsberg.

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On February 25, beer giant Anheuser-Busch InBev (AB InBev) released its 2020 annual results.
The report showed that in 2020, AB InBev achieved total revenue of $46.881 billion, a year-on-year decrease of 10.4%; net profit was $1.405 billion (2019 net profit was $9.171 billion), a year-on-year decrease of 84.68%.
On the same day, Budweiser APAC also released its 2020 financial report, showing that in 2020, Budweiser APAC's revenue was $5.588 billion, a year-on-year decrease of 12.4%. Profit attributable to shareholders was $514 million, a year-on-year decrease of 42.76%, with earnings per share of 3.89 US cents.
**-01-**
**Pandemic Hinders Budweiser**
**China Market Key to Turnaround**
Budweiser APAC stated in its financial report that last year's sales performance was directly affected by pandemic-related restrictions on sales channels, "especially in the high-end dining channels where we have a strong position in major markets."
Both AB InBev and Budweiser APAC showed significant declines in 2020 performance, with the pandemic undoubtedly being the biggest factor. Due to the global pandemic, AB InBev's total sales volume fell 5.7% in 2020, while Asia-Pacific volume was 8.1649 million kiloliters, down 12.36% year-on-year.
The financial report showed that for the full year 2020, due to a 10% decline in volume and a 1.1% decline in revenue per hectoliter, Budweiser China's revenue fell 11%. Normalized EBITDA declined 20.1%.
Due to the pandemic outbreak, Budweiser APAC's China market sales fell 17% by April 2020, but from May to June, China market sales began to rebound rapidly, with June's single-month sales hitting the highest in the company's China market sales history. In the third quarter, China market sales grew 3.1% and revenue grew 4.8%; in the fourth quarter, sales slightly increased 0.9% and revenue grew 1.3%.
In the fourth quarter, thanks to the recovery in China, Budweiser APAC's sales decline rate slowed to 2.6%, as markets like India and South Korea were still severely affected by the pandemic. This shows that China's performance became the key to Budweiser's overall rapid recovery.
During February to April 2020, the high-end dining channel faced the strictest pandemic-related restrictions, and its performance accounted for over 100% of the decline in 2020 sales volume, revenue, and normalized EBITDA.
It is worth noting that the high-end portfolio led by Budweiser achieved mid-single-digit growth in Q4 2020, and Budweiser APAC's super-premium portfolio performed strongly in Q4 2020. Budweiser APAC estimates that in fiscal 2020, Corona and Hoegaarden remained the top-selling super-premium beer brand and wheat beer brand, respectively, while Blue Girl continued its strong momentum with double-digit growth.
**China's performance has now become an important pillar for Budweiser APAC, but on the other hand, Budweiser, as the world's beer king, also faces considerable pressure domestically.**
**-02-**
**Four Giants Prepare for Battle, High-End Beer Market Full of Uncertainties**
In the high-end beer market, Budweiser has long been the benchmark. Snow Beer has even strategically regarded Budweiser as its only true competitor. As the first beer brand to release its 2020 results, Budweiser China's performance last year was still commendable. Budweiser China's business performed best within AB InBev's global operations, with faster recovery in revenue and profit.
But from another perspective, **compared with Tsingtao Beer and Snow Beer's first three quarters of 2020 results, Budweiser China appears much weaker.** In the same pandemic year, Tsingtao and Snow both saw significant profit growth in the first three quarters, proving the effectiveness of their premiumization strategies. Meanwhile, Carlsberg China, AB InBev's main competitor in the high-end market, also reported 3% growth in 2020. Carlsberg's Wusu beer began national expansion, with initial dividends showing, contributing nearly one billion yuan in profit from a single brand.
Overall, **in the next five years, "premiumization" will be the main battleground in China's beer market. Despite having both the number one high-end brand (Budweiser) and the number one super-premium brand (Corona), with the other three giants surrounding, it is not optimistic whether Budweiser can maintain its high-end leadership.**
**First, look at Tsingtao Beer.** Tsingtao has a good high-end brand heritage. Its pure draft product, as one of the super large single products in the high-end segment, has long been envied by other brands for its scale and profitability. Meanwhile, Tsingtao has performed excellently in innovative products and channels in recent years, such as dethroning Budweiser as the top beer brand in e-commerce channels two years ago. In terms of brand status, sales scale, and product structure, Tsingtao is the closest challenger to Budweiser's high-end position.
**Next, look at Snow Beer.** Since Snow entered the Hou Xiaohai era, the first three years completed major strategic actions such as capacity optimization, brand structure enhancement, and acquisition of Heineken China, preparing for the high-end decisive battle. Through optimization and consolidation of breweries, Snow reduced its number of factories by dozens over several years, has over 10,000 fewer employees than Tsingtao, and its production and sales scale is over 3 million tons higher than Tsingtao, giving it a much higher labor efficiency ratio. Tsingtao, due to institutional reasons, has been unable to start capacity consolidation. After significant profit growth, Snow increased employee benefits substantially during the 2020 pandemic, boosting morale. Snow's employee benefits rose from a medium-low level to the forefront of the industry, **attracting many talents from Budweiser and Carlsberg to Snow.**
At the same time, Snow's "Sword Casting Action" targeting high-end key accounts in 2020 yielded significant results, officially launching the high-end decisive battle.
**Finally, look at Carlsberg China.** After Wusu beer became popular nationwide, its status within Carlsberg China rose sharply, now directly managed by headquarters. In 2020, thanks to the national expansion dividend of Wusu, Carlsberg's overall profit should see substantial growth. In the previous two decades, Carlsberg did not have a clear industrial strategy in China, quietly making money. Acquired beer brands were rarely integrated into operations, mostly financial control, with little willingness to engage in operations. In other words, Carlsberg China was relatively laid-back, without obsession over market share or tonnage scale. But it is understood that **in 2021, Carlsberg for the first time proposed clear market share growth requirements.** This means that the seemingly ambitionless "old fourth" is now becoming proactive, with ideas to compete for a higher ranking in the future.
In summary, Tsingtao's development has only one path: premiumization, which it must pursue wholeheartedly; Snow, after acquiring Heineken China and building a "4+4" high-end matrix, has solved brand and capacity issues, making premiumization the necessary path from "scale first" to "brand first"; Carlsberg, as an experienced player in high-end beer, suddenly demands "progress" and market share, so it will inevitably invest heavily in the high-end market in the coming years.
With giants surrounding, can Budweiser China hold its fortress and counterattack? It's difficult.
First, AB InBev's global revenue fell 10.4% and profit fell 84.7% in 2020, with Budweiser APAC down 12.36%. **Headquarters is struggling to cope and unlikely to have extra resources to support Budweiser China; in fact, in 2021, Budweiser China may need to provide support to save headquarters.**
Second, despite China's effective pandemic control, Budweiser China's market recovery speed, sales, and profit growth are far inferior to the other three giants. In this environment, **in the coming years, Budweiser will face successive attacks from the three giants in the high-end market. Defending will be difficult, and counterattacking is almost out of the question.**
Who will win the future high-end beer market remains unknown, and Budweiser China's future is uncertain, but **the capital market, which votes with money, has already made its choice. Over the past year, Tsingtao Beer's stock price rose from 37 yuan/share to 79 yuan/share, China Resources Beer from 30 yuan/share to 58 yuan/share, while Budweiser APAC was 23 yuan/share a year ago and remains 23 yuan today.**


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