Introduction: Is Baijiu the Second Growth Curve for Beer Companies? "Dyeing white" is becoming a new trend as beer companies pursue diversification. The one that has opened the ceiling of "beer dyeing white" is undoubtedly China Resources Snow Breweries. After the successful investment in Shanxi Fenjiu by the China Resources group, China Resources Snow Breweries made multiple moves last year, successively acquiring three key liquor companies: Shandong Jingzhi Baijiu, Anhui Golden Seed Wine, and Guizhou Jinsha Wine Industry, successfully unlocking a new model of diversified liquor operations. Given China Resources Snow's position in the beer industry and the scale of the acquired baijiu companies, it is undoubtedly breaking the boundary between beer and baijiu. China Resources Snow's cross-over into baijiu is not an isolated case. Looking at recent news in the beer industry, more and more companies have joined the "dyeing white" camp. Expanding new increments in baijiu business is becoming a point of competition for beer companies. In the past, there were unsuccessful cases of "white dyeing beer" like "Moutai Beer." Now, can beer companies that "dye white" laugh last?
Is Baijiu the Second Growth Curve for Beer Companies? Many people do not know that as early as 2013, China Resources Snow Breweries had already begun exploring the baijiu business. At that time, the Manzhouli branch of China Resources Snow converted some beer canning lines to baijiu production lines, producing more than 20 types of baijiu, including Manzhouli Pure Grain and Centennial Manzhouli. At the end of 2018, the China Resources group invested in Shanxi Fenjiu, reaping substantial profits from soaring stock prices and performance. Last year, China Resources Snow officially entered baijiu, injecting capital into Jingzhi Wine Industry through a wholly-owned subsidiary and heavily investing in the listed baijiu company Golden Seed Wine. In October, it became the largest shareholder of Guizhou Jinsha Wine Industry with 12.3 billion yuan. Entering the baijiu market is a strategic decision for China Resources Beer. China Resources Beer CEO Hou Xiaohai has repeatedly emphasized: during the "14th Five-Year Plan" period, China Resources Beer will enter liquor diversification, focusing on opportunities in baijiu, red wine, yellow wine, whiskey, and other categories, with baijiu being the first choice in its diversification strategy. After the large-scale acquisitions, China Resources Beer's unique "beer dyeing white" model gradually took shape. Baijiu companies that span different production areas, have different flavor types, and have a certain reputation, combined with China Resources Beer's channel advantages, make increased revenue and thickened profits visible. The beer leaders at the same level as Snow, although not announcing entry into baijiu, have also laid out spirits categories. Budweiser APAC introduced well-known spirits brands such as Fireball Cinnamon and Buffalo Trace last year. Tsingtao Brewery revised its Articles of Association in 2020, adding the production of beverages such as soda water, whiskey, and distilled spirits to its business scope, building a multi-format ecosystem with deep correlation, mutual complementarity, and altruistic symbiosis. Second-tier leading brands like Chongqing Brewery and Zhujiang Brewery are also "dyeing white." Li Zhigang, president of Chongqing Brewery, which is vigorously promoting the national layout of Wusu Beer, specifically responded that it does not rule out the possibility of entering the baijiu field in the future. Zhujiang Brewery's annual report shows that in 2021, the company promoted baijiu projects, actively explored new business formats integrating beer and baijiu, and achieved sales revenue of 26.8557 million yuan. It said this is "breaking the model of beer brewing as the sole main business; cultivating the baijiu business is one of the development directions." It is understood that Zhujiang Brewery's "dyeing white" model involves cooperation with Wuliangye, focusing on Guangdong and surrounding markets, using baijiu sales as a supplement to further improve the company's marketing quality. Jinxing Beer, which focuses on regional development, has also taken action in dyeing white. In 2020, Jinxing Beer announced the construction of an industrial pattern of "brewing + cattle raising + house building + entering baijiu." In 2021, it took over the exclusive brand operation of Henan's century-old liquor "Funiu Bai." Beer companies crossing over into baijiu (spirits) has become a hot topic in the industry. Overall, China Resources' entry is the most noteworthy in terms of speed, breadth, and depth. Industry insiders believe that beer companies squeezing into the baijiu track to achieve dual-category operations is not only a need for off-season and peak-season complementarity, releasing the maximum marginal effect of the sales network, but also, with the ultra-high profitability of baijiu, cultivating new profit growth points and creating a "second growth curve" for performance.
Where Does the Increment That Determines the "Profit War" in Beer Come From? In 2013, beer industry production peaked, market capacity stabilized, and the era of volume growth dividends passed. Domestic beer entered a new stage of "stock competition," with major beer companies shifting from the "price war" of grabbing share to the "profit war" of the stock era. In the "profit war," major beer leaders first promoted premiumization through measures such as product price increases and capacity optimization. Therefore, over the years, beer has repeatedly advanced in upgrading product structure and accelerating ton price increases, moving beer towards high-end. However, the growth vision of product premiumization is still limited to polishing the already saturated beer market, and the growth ceiling will eventually arrive again. At this time, compared to digging deeper into the potential of the beer market, expanding non-beer businesses has become a strategic choice for companies. The intensifying competition in the domestic beer market has forced companies to proactively respond. Beer marketing expert Fang Gang pointed out: the beer market is becoming saturated, total production has been flat for a long time, and the entire industry has no significant fluctuations up or down, so domestic beer companies are all developing new categories, such as beverages, whiskey, and premixed drinks. Compared to entering beverages, whiskey, and other fields, more companies have chosen to "dye white." Because baijiu is the largest liquor market in China and has enviable high profitability, it is more attractive to beer companies with low-profit models, helping them break through performance ceilings. Now, major beer companies have different considerations in crossing over to baijiu. China Resources Snow uses its own capital and scale to integrate key domestic baijiu companies, hoping to create a "1+N" layout, using one national leading enterprise and "N" regional leading enterprises to attack the "Chinese version of Diageo" in diversified liquor operations. But some beer companies have a short-sighted view of adding baijiu business, merely to "beautify" financial reports to boost stock prices. Some small beer companies may be following the trend or because their main business is selling poorly. Different visions lead to different companies; perhaps after a while, we will see the different gains from today's different layouts. Is it easy for beer companies to cross over to baijiu? There is some difficulty because there is no successful precedent, and even strong companies like China Resources are still in the exploration stage. Zi Meng, chief analyst at Guotai Junan, told Micro Wine reporters that any industry cannot improve by internal competition alone; it must have continuous injection of fresh external blood. Beer companies are stronger than baijiu companies in management and operation experience and national channel empowerment, and "beer dyeing white" is expected to strengthen the competitiveness of baijiu companies.