---
title: "How China Resources Beer Sustains Growth in the 'Quality Era': Insights from Its 2022 Interim Report"
description: "China Resources Beer's 2022 interim results show revenue of RMB 21.013 billion, up 7% year-on-year, and net profit attributable to shareholders of RMB 3.802 billion, up 27.8%, with premium beer sales growing 10%. The company's strategic focus on premiumization and market segmentation offers valuable lessons for FMCG brands navigating cost pressures and economic downturn."
author: "陈思廷"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-08-17"
language: "en"
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# How China Resources Beer Sustains Growth in the 'Quality Era': Insights from Its 2022 Interim Report

> China Resources Beer's 2022 interim results show revenue of RMB 21.013 billion, up 7% year-on-year, and net profit attributable to shareholders of RMB 3.802 billion, up 27.8%, with premium beer sales growing 10%. The company's strategic focus on premiumization and market segmentation offers valuable lessons for FMCG brands navigating cost pressures and economic downturn.

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On August 17, China Resources Beer (00291) released its interim results for the first half of 2022, with impressive operating data that has energized the FMCG industry.
According to the data, China Resources Beer achieved revenue of RMB 21.013 billion in the reporting period, a year-on-year increase of 7%; profit attributable to shareholders was RMB 3.802 billion, up 27.8% year-on-year; and the overall average selling price rose approximately 7.7% compared to the same period last year.
In terms of production and sales volume, sales of sub-premium and above beer reached approximately 1.142 million kiloliters, up about 10.0% year-on-year; overall sales volume declined slightly by 0.7%, which was better than the overall beer industry level.
It should be noted that not only the beer category, but the entire domestic FMCG market experienced severe fluctuations in the first half of 2022. China Resources Beer, while stabilizing sales volume, achieved further improvement in product mix and sustained substantial growth in net profit. Its operational thinking and strategy are highly worthy of close attention and study by FMCG manufacturers.
**01 Observing FMCG Development from Beer Consumption in the First Half of the Year**
As Hou Xiaohai, CEO of China Resources Beer, stated at the media briefing on the afternoon of August 17, China Resources Snow's performance in the first half of the year exhibited three characteristics. These three characteristics are also worth studying and referencing for other FMCG categories.
**Characteristic 1: The first half was full of ups and downs, and China Resources Snow's business trend showed a V-shaped growth.**
At the beginning of 2022, beer consumption had a very good start, with January and February both performing well. Then came a significant downturn in March and April, especially hitting the lowest point in April, which had a major impact. After that, a rebound began in May, reaching a high point in June.
**Characteristic 2: In the first half, China Resources Snow withstood the triple pressures of rising production costs, repeated pandemic outbreaks, and economic downturn.**
The outbreak of the Russia-Ukraine conflict triggered global environmental turmoil, leading to a sharp rise in the cost of beer barley and aluminum cans in the first half; repeated pandemic outbreaks had a huge impact on beer consumption; and under the economic downturn, beer and the entire consumption environment faced challenges.
It is truly remarkable that China Resources Snow maintained steady growth despite the impact of these "three mountains."
**Characteristic 3: In a complex environment, China Resources Snow's premium beer maintained its growth momentum, contributing significantly to the interim results.**
Hou Xiaohai stated that although premium beer maintained a growth rate of 10% in the first half, it still fell short of management's expectations for medium-to-high-speed development. This also reflects that in China's beer market, amid the pandemic and economic downturn, nightlife venues and on-premise consumption terminals were significantly restricted and affected. Once the pandemic stabilizes, the development prospects for premium beer are expected to improve.
"The first half of 2022 was a very memorable one. It is also 'very rare' for China Resources Snow to achieve relatively excellent interim results under complex circumstances," said Hou Xiaohai.
From China Resources Beer's data and management analysis, it is evident that the FMCG industry as a whole experienced complex characteristics in the first half of 2022: "rising costs," "economic downturn," and "repeated pandemic outbreaks causing consumption fluctuations." New Distribution, through visits to FMCG companies and distributors, also found that many manufacturers' operating results in the first half of the year were either "double whammy in volume and profit" or "increased volume without increased profit," due to excessive "price-cutting competition" and insufficient improvement in product mix.
What deserves special attention from FMCG practitioners is that China Resources Snow was previously a master of price wars and promotional battles, but after 2017, it established a new "3+3+3" premiumization development strategy and set the strategic goal of "decisive battle for premium."
From being the number one in mainstream beer to leading the premiumization of domestic beer, this strategic insight and the ability to plan five to six years ahead are worth our reflection and study.
**02 China Resources Beer's Premium Market Research and Distinctive Market Strategies**
"A 10% growth in premium sales is acceptable from the perspective of the industry, capital markets, and news media," Hou Xiaohai expressed his attitude toward the premium performance in the first half at the media briefing. "But from our management's perspective, we are still not fully satisfied. Given our research and layout in the premium market, if it hadn't been for the pandemic impact in March and April, the growth of sub-premium and above beer in the first half would have been very good."
During his speech, Hou Xiaohai divided China's premium beer market into three tiers, and China Resources Snow has targeted goals, strategies, and implementation paths for each type of premium market segment.
**The first tier is called premium developed regions.**
This mainly includes the key markets of Guangdong, Fujian, Zhejiang, and Shanghai, and may also include Tibet, a relatively special premium market.
In these regional markets, the capacity for premium beer is large, the premium market is relatively mature, international brands have a certain first-mover advantage, and the growth of the entire premium segment is also good, with a clear upgrade to higher tiers. In premium developed regions, premium beer consumption is more brand-oriented and small-bottle oriented, and both on-premise, off-premise, and nightlife channels are developing toward premium in sync.
In premium developed regions, China Resources Snow's strategy is to rapidly expand its strength and establish a premium market share advantage and competitive advantage. However, based on China Resources Snow's different positions and capabilities in these markets, the premium developed markets are further divided into three types.
The first type is where China Resources Snow has a share foundation; the goal is rapid growth and rapid capture of the premium market. On the basis of overall market share advantage, strive to achieve premium market share advantage and dominance.
In regions where China Resources Snow's share is temporarily not advantageous, achieve sustained growth through targeted strategies, eventually approaching competitors' sales volume and share, and then gradually establish China Resources Snow's "Chinese brand + international brand" growth model. This is the second type of market.
The third type is where China Resources Snow has a weak local foundation and requires a longer time and patience to develop. Gradually build a premium team, establish premium channels, build brand foundation, develop steadily, accumulate momentum, and wait for opportunities to further attack the premium market.
**The second tier is called premium developing regions.**
What are developing regions? They refer to provinces with a relatively good socio-economic environment, an obvious and fast overall consumption upgrade trend, and a good market foundation for China Resources Snow. Examples include provincial markets such as Jiangsu, Anhui, Shandong, Liaoning, Sichuan, Guizhou, and Henan.
In these markets, the capacity for premium beer is not particularly large yet; mid-range beer has the largest capacity and is developing toward sub-premium, premium, and super-premium, with obvious trends and strong momentum. No brand has yet formed a dominant or large share advantage in the premium segment in these markets.
China Resources Snow has greater opportunities in such markets. Its strategy is to quickly establish a first-mover advantage in premium, continuously accumulate capabilities and scale, and achieve rapid development within the next three to five years, with the goal of becoming the number one in premium beer share.
While establishing a first-mover advantage in premium and super-premium, China Resources Snow also needs to consolidate its strong position in the mid-range market share in these markets. These markets are the biggest growth point for China Resources Snow's current and future premium development.
Premium developed regions are currently the main production areas for domestic premium beer, while premium developing regions are the secondary production areas. However, in the future, the largest incremental space will be in developing regions, while developed regions will quickly encounter bottlenecks in premium growth.
**The third tier is premium emerging regions.**
This mainly includes provincial markets where premium energy was very low in the past, the market is dominated by mainstream beer, and premium is just in its infancy. This includes some northwestern provinces, and northeastern markets such as Heilongjiang and Jilin.
In such markets, China Resources Snow aims to achieve first-mover advantage, build channel brand and terminal foundation, establish premium sales capabilities, and lay the foundation for future premium market development.
The development of premium beer in premium emerging regions will require a longer time to gradually achieve premiumization and consumption upgrade. As long as China Resources Snow grasps the market rhythm, it can gradually reap the dividends released by the market in the wave of premium growth.
From the above, it is not difficult to see that this is a premium beer development strategy and thinking with distinctive China Resources Snow characteristics. It combines the regional status of China's premium beer development and China Resources Snow's market position in each region, thereby proposing premiumization goals and implementation paths tailored to local conditions.
For other FMCG categories, in the pursuit of quality growth, they also need to find opportunities for mid-to-high-end development in their own categories, just like China Resources Snow, and match scientific goals, strategies, and implementation paths according to local conditions.
2022 marks the final year of the second three-year phase of the "3+3+3" premiumization development strategy proposed by China Resources Snow in 2017, and it is also the year when the third three-year phase is about to begin. At the meeting, Hou Xiaohai also stated that one of the main goals for China Resources Snow in the next three years is to **"win the premium market decisively"** .
Specifically, "winning the premium market decisively" means achieving the number one share and position in the premium beer segment, or being infinitely close to it. And this field is precisely the uncharted territory that domestic beer brands, and even Chinese FMCG brands, have never set foot in.
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