Click to read the original article for details China Resources Beer's interim results were excellent, Premium growth became the biggest highlight On August 18, China Resources Beer (00291.HK) announced its interim results for the six months ended June 30, 2021, with all key indicators performing well and exceeding industry expectations. According to the interim report, H1 sales reached RMB 19.634 billion, up 12.8% year-on-year; sales volume completed 6,633.7 million liters, up 4.9%; net profit reached RMB 4.291 billion, up 106.4%. Some industry insiders said that if the market remains normal in the second half of the year, China Resources Beer may win the "double crown" of China's beer sales volume and profit this year. In terms of sales structure, China Resources Beer's premium strategy has achieved initial results. In the interim results, sales volume of sub-premium and above beer exceeded 1 million kiloliters, a significant year-on-year increase of 50.9%, with a notable improvement in structure. It is precisely due to the significant growth in premium performance, even the "better-than-expected" growth as described by China Resources Beer CEO Hou Xiaohai, that drove the substantial increase in per-ton price, per-ton profit, and overall profit for China Resources Beer. (Snow Black Lion Gift Box) So, in the first half of 2021, where did China Resources Beer's premium growth mainly come from, and what key strategies did it use to drive the rapid growth of premium products? In response to questions from New Distribution at the China Resources Beer interim results press conference, CEO Hou Xiaohai provided detailed and in-depth explanations. Where did the premium performance growth come from? At the interim results meeting, Hou Xiaohai commented on the premium growth in the first half of the year. In the sub-premium segment, products centered on Brave the World SuperX saw growth of about double, making it the fastest-growing part of the large premium structure. Currently, Brave the World SuperX has already taken a very large share advantage in the sub-premium segment. In the premium segment, mainly Snow Pure Draft and Mars Green, the growth has been the most rapid in recent years. This is partly due to the overall trend of premiumization in the beer category this year, and partly because in this wave of premiumization, brands with Chinese cultural elements have gained more recognition and acceptance from consumers. In terms of international brands, brands represented by Heineken also achieved better-than-expected growth in the first half of the year. (Mr. Hou Xiaohai, CEO of China Resources Beer) Hou Xiaohai stated at the meeting that in the short term, the growth target in the large premium segment has been exceeded, but the real goal of China Resources Beer's premium strategy is to achieve the largest share in the super-premium segment above RMB 12 after a certain period. China Resources Beer's brand strategy is a unique "domestic + international" dual-wheel development strategy. Hou Xiaohai believes that the premiumization of China's beer market is first and foremost the premiumization of Chinese beer brands. Therefore, although international brands have been earlier in premiumization and have a higher share in the premium segment, in the long run, Chinese beer brands will still be the biggest beneficiaries of the premiumization dividend. "After the premiumization of China's beer market matures, the ratio of domestic and international brands may still be 7:3 or 6:4, which is normal," Hou Xiaohai made such a judgment about the future premium segment of China's beer market. Key strategies for China Resources Beer's decisive battle in premiumization At the press conference, Hou Xiaohai mentioned two key strategies that play a crucial role in China Resources Beer's premium growth: "developing premium key accounts" and "smart channel marketing." The core of China Resources Beer's premium strategy is called "Five Points One Line", which includes "key account establishment, channel marketing activities, sales team, commanding heights, and brand portfolio." "Key account establishment and channel marketing activities are important sales strategies in our decisive battle for premiumization, key measures in the implementation of our premium strategy, and also the methods or models that China Resources Beer has explored and developed to achieve premiumization." Hou Xiaohai commented on their status and role in the premium strategy. 1) Snow's distinctive premium key account platform strategy In the past era of scale growth, China Resources Beer adopted a sales model mainly based on deep distribution, dividing regions and corresponding one-to-one, using numerous distributors to provide one-on-one direct coverage and service to a large number of terminals. But entering the stage of high-quality development and premiumization, new functions and requirements have been put forward for beer distributor customers. Therefore, the original distributor capabilities mainly focused on coverage need to meet new requirements in multiple aspects such as premiumization capabilities, resources, development and control capabilities, and market discourse power. Therefore, China Resources Beer formulated a key account strategy with Chinese Resources characteristics. The requirements for key accounts are not only large but also strong. Thus, Snow has built a premium key account platform with Snow characteristics, aiming to develop, grow, and strengthen together with customers. China Resources Beer's key accounts are divided into three levels: national, provincial, and municipal, respectively called Huading Club, Huazun Club, and Huajue Club. According to the first phase of the key account development plan, Huading Club has about 50-60 members, Huazun Club about 1,000 members, and Huajue Club about 2,000 members. The goal is to establish a national platform with no fewer than 3,000 premium key accounts. China Resources Beer also spares no effort in empowering and supporting these premium key accounts, including jointly formulating future development plans, and providing in-depth and continuous training programs for distributors' teams and even successors. This will be a very important fulcrum in China Resources Beer's premium strategy. 2) "Making channel marketing refined," the key to premium product terminal tactics China Resources Beer defines "channel marketing" as centered on core terminals, including in-store atmosphere creation, in-store activities, in-store investment, consumer interaction, and brand communication, collectively referred to as channel marketing. "China Resources Beer's strategies and tactics are very down-to-earth. The smart channel marketing strategy is the result of our adherence to 'from business, to business'," Hou Xiaohai believes that Snow's unique "smart channel marketing" approach has evolved from nothing to something, and from something to refined. To do this well, China Resources Beer has established its own channel marketing action guidelines and management norms, which have been iterated to version 2.0, and has also formed a dedicated national channel marketing team. From the national, provincial, and municipal levels, there are large, medium, and small, intermittent and long-term channel marketing activities. In version 1.0 of channel marketing, "smart channel marketing" was proposed. The requirement is that implementation is simple and effective, more branded, more economical, and can bring direct sensory interaction to consumers. Do not use high costs and clumsy methods to do very complex channel marketing activities, but stay close to terminals and consumers. In 2021, entering the era of channel marketing 2.0, it has evolved from "smart channel marketing" to the stage of "making channel marketing refined". The new requirement is to make it refined on the basis of smartness, meaning channel marketing activities should be more lean, more exciting, and more exquisite. The continuous improvement of requirements actually drives the continuous improvement of team capabilities and channel marketing capabilities. "This will be the most important magic weapon for China Resources Beer to win in the process of implementing its premium strategy to the terminal." Hou Xiaohai believes that channel marketing in the beer industry is generally still rough and not smart enough, but China Resources Beer, through two years of exploration and summarization, has formed its own characteristics and is ahead of the industry. PS: From September 23-25, 2021, the 2021 (4th) China FMCG Conference hosted by "New Distribution" will be held in Shanghai. Focusing on industry trends + practical cases + growth connection as the core, 3,000 FMCG practitioners will gather at the event. 10 thematic forums cover new retail O2O, community group buying, short video live e-commerce, distributor transformation, rise of new consumer brands, new alcoholic beverages interpretation, distributor B2B supply chain, omni-channel marketing, B2B2C new technology applications, etc., with operators from various segments bringing the latest case studies. Some of the heavy-weight guests confirmed so far include: 1. Tao Shiquan, founder of Jiangxiaobai; 2. Yao Xuhong, general manager of Meiyijia Holdings Co., Ltd.; 3. Lu Xiuqiong, global expert partner at Bain & Company and former vice president of marketing for Coca-Cola China; 4. Chen Xiaodong, senior vice president of Nestlé Greater China; 5. Zhang Fujun, president of Lee Kum Kee Sauce Group China; 6. Bi Chaojiao, general manager of China Resources Snow Breweries (China) Marketing Center; 7. Yang Hongbin, vice president of Junlebao Dairy Group; 8. Yang Shun, COO of Lipton Greater China; 9. Zhang Yipeng, general manager of Kuaishou E-commerce SKA Brand Operations Center; 10. Li De, e-commerce general manager of Gold Hong Ye Paper Group... A grand event for FMCG practitioners, you must be there! Are you "watching" me?