---
title: "Budweiser Suffers from 'Premium Anxiety'"
description: "Budweiser, the premium beer leader, is also feeling anxious. According to Budweiser APAC's 2023 financial report, annual revenue was $6.856 billion, up 11.1% year-on-year, but net profit was $852 million, down 6.7%. The company is clearly caught in a cycle of increasing revenue without increasing profit. While rising sales costs have impacted net profit, the more critical issue is that competition in the premium beer market has become intense, and Budweiser, which relies heavily on the Chinese market, is seeing its market share eroded by local brands like China Resources, Tsingtao, and Yanjing."
author: "贾贺辉"
publisher: "New Distribution"
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published: "2024-05-09"
language: "en"
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# Budweiser Suffers from 'Premium Anxiety'

> Budweiser, the premium beer leader, is also feeling anxious. According to Budweiser APAC's 2023 financial report, annual revenue was $6.856 billion, up 11.1% year-on-year, but net profit was $852 million, down 6.7%. The company is clearly caught in a cycle of increasing revenue without increasing profit. While rising sales costs have impacted net profit, the more critical issue is that competition in the premium beer market has become intense, and Budweiser, which relies heavily on the Chinese market, is seeing its market share eroded by local brands like China Resources, Tsingtao, and Yanjing.

Budweiser, the premium beer leader, is also feeling anxious.
According to Budweiser APAC's 2023 financial report, annual revenue was $6.856 billion, up 11.1% year-on-year; net profit was $852 million, down 6.7%. In terms of performance, it is clearly caught in a cycle of increasing revenue without increasing profit.
While rising sales costs have impacted net profit, the more critical issue is that competition in the premium beer market has become intense over the past few years. Budweiser, which relies heavily on the Chinese market, is seeing its market share eroded by local brands like China Resources, Tsingtao, and Yanjing.
Since 2021, China Resources has launched "Brave the World Super X" and "Faces," Tsingtao has "Century Journey Legend," and Yanjing has introduced "S12 Pilsner" and offline Lion King craft beer taverns.
In an era of fierce competition in the premium beer market, Budweiser is becoming awkward, with its share of the premium market dropping from an initial 50% to less than 40%.
Amid internal and external pressures, Budweiser naturally wants to retain consumers through new stories and experiences. But what do consumers who buy premium beer really value? Can Budweiser maintain its leading position through organic beer and other measures?
**Sticking to the Premium Route**
Even those who rarely drink beer are likely familiar with the Budweiser brand. As the world's largest beer group, Budweiser produces nearly half of its products as premium beers and holds the top position in the premium beer market.
Taking the Asia-Pacific market as an example, according to Euromonitor data, from 2019 to 2021, Budweiser APAC's share of the premium market remained between 37% and 40%. Whether in actual market performance or consumer perception, Budweiser's leading position is stable.
However, comparing horizontally, Budweiser, Tsingtao, and Snow are essentially industrial beers. Why can Budweiser sell ordinary beer at higher prices in China?
**First, Budweiser entered the Chinese beer market early.** Public data shows that Budweiser Group officially entered the Chinese market in 1984, before the domestic "beer special project" that started in 1985. In 1995, Budweiser's first brewery in Wuhan began production, leveraging first-mover advantages to capture consumer mindshare. It is understood that the domestic market contributes over 70% of Budweiser's total revenue in the Asia-Pacific region.
Forty years of deep cultivation have made Budweiser a household name. To date, Budweiser has invested over 30 billion yuan in China, operates about 30 breweries, and owns more than 500 brands, including Budweiser, Corona, and Harbin Beer, most of which were acquired through continuous mergers and acquisitions.
**Second, Budweiser has unwaveringly pursued a premium route since its inception,** building its brand image. Even now, Budweiser China's slogan remains "Leading and shaping the premium market as the top domestic premium brand." This approach is similar to Starbucks, which also entered the Chinese market under the banner of premium and even led a trend in freshly brewed coffee.
**Third, Budweiser's precision in marketing strategy.** To match its positioning in the beer market, Budweiser tends to sponsor high-profile sporting events such as the Olympics, the World Cup, and the NBA, including sponsoring the 2008 Beijing Olympics and the 2018 World Cup, which have brought Budweiser significant brand awareness and exposure.
More importantly, Budweiser focuses on marketing to the post-80s and post-90s young demographic, emphasizing empathy with young people and subtly promoting the group's beer culture.
Image source: Budweiser Beer official Weibo
Adherence to the premium route and precise marketing have made Budweiser's brand image deeply ingrained.
For example, a test in the carbonated beverage industry: first, consumers tasted Coca-Cola and Pepsi directly and evaluated them; many thought Coca-Cola tasted better. Second, keeping the packaging unchanged but swapping the contents, most consumers still believed the drink in the Coca-Cola bottle was more delicious. Analogously, similar tests with Budweiser beer yielded almost identical conclusions.
Undeniably, through its business strategy, Budweiser firmly holds the premium leading position. However, in today's rapidly changing consumer era, the market has undergone significant shifts—some consumers have turned to mid- and low-end beers, while others have more choices as major brands enter the premium segment. Budweiser's premium market share is being eroded.
According to Euromonitor data, Budweiser APAC's market share in China's premium beer market has declined from nearly 50% to less than 40%, and the downward trend continues. How can Budweiser stabilize its market share?
**What Are They Buying?**
To stabilize market share, Budweiser must first answer: Who is paying for premium beer?
Based on data from iiMedia Research and Ries Strategic Positioning Consulting, China's beer consumers are trending younger, with an average age of 34, mainly concentrated in the 20-50 age group. The young adult alcohol market is as large as 400 billion yuan, with over 50% of young professionals spending more than 1,000 yuan per month on alcohol.
From a consumer psychology perspective, young people are not keen on baijiu culture but prefer a drink after work to relax. Behind this is a desire to regain control over their lives. That glass of craft beer after work is their elixir to transform from a "cog" into a "person." The slight buzz from craft beer provides them with a sense of "controlled indulgence." **Behind this shift are three key demand keywords: social needs, identity recognition, and self-pursuit.**
Image source: Lion King Craft Beer official Weibo
What do premium beer drinkers care about? A glimpse can be seen from Budweiser's consumer alcohol demand map.
Based on changes in consumer psychology and behavior, in the super-premium segment, Budweiser has created super-premium brands like Blue Girl, Corona, and Hoegaarden. In the flagship brand, Budweiser has become a growth driver in China's premium beer market.
Budweiser's various sub-brands are adapted to different drinking occasions and are complementary to each other.
For example, in small groups, Corona is suitable for relaxed occasions, with the main drinking need being relaxation and unwinding; Stella Artois is suitable for higher-energy occasions like restaurants or bars.
In large groups, Budweiser is suitable for social activities in high-energy environments; Michelob Ultra is suitable for building emotional bonds with friends, such as celebrations and revelry after sports like basketball or football.
Clear scenarios help users form perceptual memory. Often, consumers choose a product through scenario association. For instance, mentioning Corona triggers a conditioned response of sunset beaches, while Budweiser corresponds to louder, trendier music decibels.
**When premium beer is linked to fixed scenarios, it becomes not just social currency but also a representation of a lifestyle, emerging culture, or spiritual coordinate.**
Image source: Corona official Weibo
Premium beer can certainly serve as a social business card, but to some extent, the type of beer one drinks reflects the drinker's income and identity.
From the production process and pricing of premium beers like craft beer, their high prices stem from standards aligned with international pricing, relatively complex production processes, and limited production scale. These factors determine that premium beer is a commodity that can only be consumed regularly by those with strong economic capability. Consequently, premium beer has gradually become a symbol of middle-class elites pursuing quality of life.
**For the main consumer group—young people—the transition from industrial beer to craft beer also aligns with the consumption upgrade needs brought by identity changes.** For example, as the Year of the Dragon approached, Budweiser launched the "Budweiser Master Reserve Dragon Year Limited Edition" gift box. On the surface, it sells premium, but it is more like a metaphor for a specific identity, temperament, and circle culture.
Additionally, **the unique design of packaging and innovative flavors in premium beers are also reasons that attract young consumers.** Craft beer offers more diverse tastes and unique consumption experiences, leading young consumers to associate it with premium, independent, artistic, and niche.
By occupying celebration moments (such as FIFA World Cup and other major events), leading and shaping culture (EDM music festivals), and creating premium symbols (Budweiser Master Reserve New Year limited series), Budweiser has indeed grasped the changing drinking psychology of young consumers, striving to become an indispensable part of their lives. Its marketing strategy is also continuously boosting its premiumization strategy.
However, as mentioned at the beginning of this article, Budweiser is not the only player in the premium beer market.
**Curve to Save or Overtake?**
Premiumization is a long road, and Budweiser faces two major mountains.
On one hand, **local Chinese brands are rapidly rising.** According to the General Administration of Customs, in 2023, China's beer imports were 418,300 kiloliters, down 13.2% year-on-year, with an import value of 4.058 billion yuan, down 6.6%; beer exports were 621,000 kiloliters, up nearly 30%, with a value of 3.185 billion yuan, up 45.7%.
It is clear that China's local beer exports and growth rates have surpassed imported beers, indicating the continuous rise of local brands and a shift in the long-held dominance of foreign brands in the premium beer market.
On the other hand, **Budweiser is facing encirclement from competitors.** Across the industry, all leading Chinese beer brands are actively laying out premium and super-premium products:
Tsingtao Beer, while maintaining its "Tsingtao + Laoshan" strategy, has launched premium products like "Auguste" and "Hongyun Head." In 2020, it launched the 388 yuan/bottle "Century Journey," and in 2022, the 1,399 yuan "Legend of a Lifetime." China Resources Beer has successively launched new products such as "Brave the World SuperX," "Craftsmanship," "Mars Green," and "Faces." In 2021, it launched the 999 yuan/box "Li" product, and in 2023, it introduced the super-premium strong beer "Nong Li," also crossing the thousand-yuan level. Yanjing Beer also launched the super-premium "Lion King" series in 2021, continuously increasing its focus on the premium market.
Image source: China Resources Beer
Facing the relentless pressure from competitors, Budweiser has been exploring ways to break through. Following the trend of health consciousness, Budweiser launched Budweiser Zero in 2020, with the slogan "Zero alcohol, zero compromise," inviting a number of sports stars to endorse it.
While betting on healthy non-alcoholic beer, Budweiser also launched a new product line—Master Organic Beer—aiming to attract consumers with labels like "high quality" and "safety" of organic products, further expanding its premium product matrix.
From a forward-looking perspective, this organic beer may lay the foundation for Budweiser to build a "new growth engine." But the beer market is not just a product-level game; it is also a strategic integration of supply chain, sales channels, and more.
In these areas, Budweiser's competitors have not been idle. China Resources Beer, on one hand, has acquired Heineken China to seize the premium market; on the other hand, it has continuously improved its supply chain, launching a pilot project for standardized domestic barley cultivation, attempting to explore a standardized "barley cultivation system" for China Resources Beer, thereby improving barley quality and achieving cost reduction and efficiency.
In terms of channel construction, besides conventional practices like sponsoring music festivals and football matches, major brands are experimenting with offline tavern businesses to seize the "craft beer" consumption scenario. For example, Tsingtao Beer launched the 1903 Qingdao Tavern, China Resources launched the small tavern brand JOY BREW, and Yanjing Beer is experimenting with community taverns...
In contrast, Budweiser, apart from launching two new products, is trying to leverage Swire Coca-Cola's distribution advantages to seize market share from "strong rival" China Resources Beer in Anhui and Hubei. Compared to these, these measures do seem somewhat "old-fashioned."
Undeniably, as a beer industry giant, Budweiser maintains a huge market advantage. But in the increasingly competitive 2024, what new "premiumization" strategies will Budweiser, which is already somewhat anxious, come up with?
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