Preface: In 2020, many industries were hit by the pandemic, and beer, a category heavily reliant on offline channels, faced significant challenges as restaurants and entertainment venues were severely impacted. However, China Resources Snow, the leading beer company, became a "contrarian" during the pandemic. Compared to distributors of other brands, Snow Beer's distributors were very fortunate in this turbulent 2020. How did Snow achieve these results in such a volatile year? What is the development strategy for 2021? What new opportunities will our distributors gain from the Snow brand? At the turn of the year, New Distribution invited Bi Chaojiao, General Manager of the Marketing Center of China Resources Snow Beer (China) Co., Ltd., to share his insights. The following is a compiled version of Mr. Bi's sharing for our readers.

The Second 3-Year Phase of Snow's 3+3+3 Strategy: How to Transform Scale Advantage into Quality Advantage?

Presented by Bi Chaojiao | Compiled by Chen Feng

Achieving growth in 2020 despite the pandemic must be traced back to Snow's strategy. Since Hou Xiaohai took the helm, Snow has laid out a 3+3+3 strategy, with three-year phases, taking three steps, to transform Snow's previous scale advantage into a quality advantage through three 3-year plans. In the first three years (2017-2019), the focus was on capacity optimization, brand reshaping, and channel empowerment. Capacity and organizational teams were optimized, brand building and channel empowerment were carried out, achieving the strategic goals of shedding burdens, strengthening foundations, and accumulating energy, which have now been basically realized. In the second three years (2020-2022), the focus is on addressing shortcomings, increasing efficiency, and improving quality, providing energy and momentum for future high-quality development. In the final three years (2023-2025), the goal is to achieve victory in the premium segment and卓越发展, making Snow a leading enterprise with the highest brand value, strongest profitability, and best management efficiency.

2020 was supposed to be the opening year of the second three-year phase. Snow's strategy was to address shortcomings, improve quality, increase efficiency, and make a decisive push in the premium segment, aiming for a strong start in high-quality development. However, the pandemic hit the entire industry, and Snow inevitably suffered some impact in its planning and operations. In fact, in February and March 2020, sales were nearly halved repeatedly. Yet, in such a difficult year, Snow still achieved overall high growth. Except for the pressure in the first quarter, the subsequent three quarters saw not only no decline but significant growth, and the stock price soared, with market value now approaching HK$250 billion. Besides the long-term strategy, what else did Snow do right in 2020?

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What Did Snow Do Right in 2020?

1. Ensuring Safety and Rapid Resumption of Work When facing the pandemic, our top priority was ensuring the safety of employees and their families, distributors, and production. On this basis, we even communicated with terminals to provide services and ensure their safety and communication.

After resuming work, a Snow Brewery factory conducted comprehensive disinfection four times a day.

This measure ensured the normal operation of Snow's upstream and downstream during the pandemic, achieving rapid resumption of work and sales recovery with zero errors. Despite near-halving sales in the first quarter, we quickly recovered performance and achieved overall positive growth.

2. Strategic Stability The sudden pandemic did not shake Snow's strategic plans. During the pandemic period, we decided to maintain brand investment and product matrix layout actions unchanged.

We continued collaborations with programs like "Street Dance of China" and trendy toy variety shows. The brand and corporate promotion efforts were not reduced due to the pandemic. The exposure and consumption heat of the small blue bottle SuperX continued to rise, and products like Mars Green, Ingenuity Creation, and Pure Draft also saw good growth in the last three quarters. We believe our distributor partners and shareholders have also gained more profits.

Despite the adverse conditions, the new product Heineken Silver was launched and received positive market feedback. The successful launch of Heineken Silver further improved Snow's "4+4" brand matrix deployment, especially in the premium brand layout. In terms of overall sales volume, despite the significant industry decline, Snow did not decrease much. Thanks to the growth of mid-to-high-end products, our performance continued to rise.

3. Channel Deepening Snow's channel team has also expanded. This year, we developed many new key accounts and empowered both new and existing customers, continuously strengthening their capabilities. Specifically, we secured many chain stores, and the catering and nightlife sectors have also developed, which will contribute to Snow's terminal promotion capabilities this year.

As you can see, Snow's high-end products performed very well in terminals this year, whether in restaurants, entertainment venues, CVS stores, or KA outlets, in terms of display and promotion.

Under Snow's overall strategy, what major strategic initiatives will be taken in 2021? Since corporate initiatives often hide business opportunities for distributors, what opportunities does Snow leave for distributors in 2021?

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What Will Snow Do in 2021?

Mr. Bi also provided a detailed introduction to the plans for the new year. He stated that in 2021, Snow will focus on three major aspects:

1. Continuous Brand Upgrade Continuous upgrade and optimization of brand products, continuously strengthening brand image through various IP resources and cultural integration, and seizing consumer mindshare. In 2021, we will continue to promote Chinese brands, led by SuperX, and further cultivate Mars Green, Ingenuity Creation, and Face Painting. We will also further expand coverage to towns, including making Brave the World stronger.

You will see that investment in Chinese brands in 2021 will be even greater than in 2020. We will continue to cooperate with quality IPs, such as this year's collaboration with "Street Dance of China." We aim to establish better interaction with young target groups and build our brand image in their minds. For example, Mars Green's trendy toy programs position it as "cool" for people aged 25-30; the blue bottle is positioned as "challenging" and "cool" for the 18-25 age group; Ingenuity Creation is associated with gourmet food, further building an image of aspiration for the 35-40 age group; Face Painting represents a Chinese style, targeting the 45-55 age group, integrating cultural content like national essence that represents China; Pure Draft will continue to communicate quality.

We will also increase investment in international brands. I can tell you that next year, Heineken will have two top European events, the UEFA European Championship and the UEFA Champions League, promoted in China. This is unique to Heineken, aiming to establish Heineken's strongest international brand image in the domestic market.

We will also introduce Redd's, currently the best-selling brand in Europe, to further fuel our premium strategy. Together with Sol's South American style, Tiger, Edelweiss, etc., we will build a very complete and strong brand matrix.

2. Strengthening Distributor Operational Capabilities Continuously strengthen distributor operational capabilities, especially cultivating key accounts capable of handling premium brands and products, and also hope more capable distributors will join.

We will classify customers nationwide, grading them based on volume, control of high ground, and strength in different markets. Under this classification, we will conduct tiered operations. For top national customers, we will establish direct connections with headquarters, and every tier of customers will have close interaction with our personnel.

We will cooperate better with capable key accounts, providing more sales expenses for distributors to control, rather than being company-led. This is a great empowerment for customers.

We will also divide responsibilities with distributors: key accounts will handle business, manage terminals, integrate product portfolios, execute sales promotion actions, and provide good service to terminals. We will handle branding, provide management experience, and teach you how to improve business management efficiency, warehouse, capital, personnel, etc.

Additionally, we will recommend resources for key accounts, such as those who can provide capital or have more vehicles, leveraging our scale advantages to obtain favorable conditions.

3. Jointly Enhancing High-End Capabilities Furthermore, we will work with customers to jointly enhance high-end capabilities, develop and serve terminals well, especially high-end terminals, improve profitability, and achieve a win-win-win situation for the manufacturer, distributor, and terminal.

We will open classes at China Resources University to provide special empowerment for distributors, including training for their successors. Through the cultivation of all key accounts and tiered operations, we will enhance customers' sales capabilities, especially for high-end products. We want customers to capture more market high ground and operate in markets with the highest volume of high-end products, such as Fujian, Guangdong, Shanghai, and Beijing. Channels include entertainment venues and high-end chain restaurants, relying on products, customers, and reasonable cost investment to make a comprehensive push.

We also need to develop our own high-end capabilities. This year, we completed the adjustment of our high-end organization, with a stronger and more professional team. We will also support customers in this area to enhance both parties' capabilities.

In summary, in 2021, we aim for high-quality development. All aspects must be elevated: products, store terminals, and markets. The company must be profitable, and partners and terminals must also be profitable.

Therefore, our development must move forward with quality, further develop the "4+4" brands, engage in more and better terminal cooperation, enhance our high-end capabilities, achieve orderly development, and ultimately achieve a win-win situation. Whether you are an existing distributor within the Snow system or a new distributor with capability and willingness to join, 2021 will be an excellent opportunity to grow stronger and achieve greater development.

Snow has a strong willingness to cooperate with larger customers and has been taking action. We hope those distributors with strength, social resources, good business concepts, and strong teams will approach our local marketing centers to demonstrate your capabilities. As long as you can show your strength, Snow will tailor the best arrangements based on your strength and capabilities.

Once the tip is adopted, a reward of 400-2000 yuan will be paid.