Currently, the beer industry faces intense competition and consumption upgrade challenges amid steady development, with rising market concentration and saturation. Meanwhile, as people pursue quality of life, more consumers are turning to high-end beer, and personalization and customization are becoming key trends. In this context, how can beer companies expand diversified sales channels and enhance their overall competitiveness? Recently, Northeast Securities released a report on the beer industry, comprehensively presenting the current status, competitive landscape, and development trends of China's beer industry, providing an important reference for the sector. Total Beer Output Stabilizes After Decline Slight Negative Revenue Growth in First Three Quarters Looking at the development of China's beer industry, since 2005, both total output and sales have shown significant growth, peaking in 2013 with both exceeding 50 million kiloliters. In recent years, due to an aging population, severe product homogenization, and the rise of the "drink less, drink better" trend, total output and sales have gradually declined since 2013. By December 2023, total output had fallen nearly 18% from its peak to 33 million kiloliters. According to Euromonitor, beer sales in China are expected to remain relatively stable over the next four years, stabilizing at around 43 million kiloliters from 2024 to 2027. In 2023, the seven A-share listed beer companies achieved total revenue of RMB 69.534 billion, up 6.16% year-on-year; net profit attributable to shareholders was RMB 6.849 billion, up 16.94%. In the third quarter of 2024, the beer sector achieved revenue of RMB 60.824 billion, down 1.95% year-on-year; net profit attributable to shareholders was RMB 8.481 billion, up 7.73%. In 2023, the beer industry achieved stable growth with a mid-single-digit growth rate. However, by the third quarter of 2024, due to base effects and the consumption environment, industry revenue saw slight negative growth. Despite this, regional beer companies still showed relatively fast growth. As an important on-premise channel, foodservice is crucial for beer sales. In recent years, on-premise and off-premise channels each account for about 50% of beer sales. According to Euromonitor's off-premise channel data, modern retail channels such as convenience stores, hypermarkets, and mixed supermarkets have seen their share increase year by year. By 2023, they had become dominant, with independent small retail stores and hypermarkets being the two main offline sales channels, accounting for 49% and 31.9% respectively. The share of traditional retail channels continues to decline, and with the gradual expansion of online sales channels, their share has risen from 2% in 2014 to 7.7% in 2023. Rising household income provides an objective basis for the expansion of mid-to-high-end beer, and the share of mid-to-high-end beer sales has steadily increased. In terms of income structure, it is expected that from 2015 to 2030, the proportion of middle-to-high-income people will rise from 9.7% to 34.2%, and the expansion of this group will drive demand for high-quality goods such as mid-to-high-end beer. The combined sales share of mid-to-high-end lager beer rose from 26.5% in 2016 to 38.2% in 2023, and will continue to increase in the future. Notably, young consumers have strong purchasing power, with Gen Z and female consumers showing strong willingness to buy. According to the Tmall Beer Trend White Paper, Gen Z (aged 18-24) is the fastest-growing beer consumption group. In addition, women with monthly spending over RMB 1,000 on Taobao also hold a clear advantage in beer consumption, and the rapid growth of female beer consumers will continue to expand the potential consumer base for the sub-premium and above price bands, accelerating the pace of beer consumption upgrades. Rapid Expansion of the 8-Yuan Price Band Differentiated Products Emerge Data analysis shows that from 2012 to 2023, the average retail prices for both on-premise and off-premise beer in China continued to rise, with off-premise/on-premise average prices increasing from RMB 3.01/5.15 to RMB 5.86/12.11 respectively. On-premise retail prices also grew rapidly, and by 2023, the on-premise retail price was significantly higher than off-premise by about 106.7%. The overall average retail price of beer increased from RMB 4.10 to RMB 8.84, reaching above RMB 8, and products in the 8-10 yuan price band are becoming the market mainstream. Beer pricing strategy experiments show that consumers make compromise choices when weighing quality and price. Currently, in China's beer market, the 8-10 yuan price band, as mid-to-high-end products, can satisfy consumers' pursuit of quality while fitting current consumption levels, and is widely favored by consumers. This price band is currently in a growth phase, and domestic beer manufacturers have been deploying in recent years. Representative products such as U8, SuperX, and Classic 1903 have grown rapidly and are expected to become million-ton single products. Various differentiated mid-to-high-end products are emerging to meet diverse consumer needs. A rich product system is an inevitable trend of premiumization, and beer manufacturers have launched craft products such as white beer and stout. Data shows that from 2016 to 2023, white beer sales increased from 197,000 tons to 698,000 tons; stout sales increased from 163,000 tons to 432,000 tons. Leading domestic beer companies are actively positioning themselves in the fast-growing craft beer segment, leveraging advantages in price, brand, and channels over independent manufacturers. China's craft beer market is currently small, with a market share of only 1.9% in 2021, but its high growth trend in recent years has attracted the attention and active deployment of leading domestic beer companies. Data shows that in 2018, there were over 2,000 craft beer companies in China, and by the first half of 2020, the number had nearly reached 5,000, doubling in two years. The domestic independent craft beer market is highly fragmented, while leading beer companies have advantages in price, brand, and channels. Especially in terms of price, 72.9% of consumers are only willing to pay a premium of up to 25% over industrial beer prices. Leading companies, due to their large production scale, have cost advantages and can offer lower prices than independent manufacturers at the same profit level. How Will the Beer Industry Develop in the Future? As foodservice revenue growth slows relatively, the pace of premiumization for beer manufacturers is affected, and the increase in average price per ton is gradually narrowing. Industry insiders believe that the beer industry has not yet reached its bottleneck, the sub-premium upgrade trend is evident, and the mid-range consumer market shows strong resilience. The price band has large capacity, and brand power makes upgrades less resistant and more certain. Leading beer companies still have a high proportion of low-end product sales, and the trend of integrating low-end products into mid-to-high-end products is clear. Facing the bottleneck in total beer consumption, beer companies continue to advance premiumization, expand brand matrices on the sales side, enhance brand influence, actively compete in the high-end market, and promote digital transformation on the production side to achieve high-quality development. At the same time, mass-market price products, as the current sales base, are an important source of profit and have potential for upgrading to high-end products, so manufacturers are also actively deploying. For example, China Resources Beer has adopted a "beer + baijiu" dual-empowerment strategy, further deepening its high-end beer market while baijiu provides a second growth curve; Tsingtao Brewery promotes product structure upgrades and uses digitalization to empower factories, becoming the world's first "Sustainable Lighthouse Factory" in the beer and beverage industry; Budweiser maintains its high-end positioning and actively promotes digitalization, with its BEES platform covering over 300 cities; Chongqing Brewery and Yanjing Brewery, while moving toward high-end, actively expand their product lines to meet the needs of various consumers. It is thus clear that in the future, the direction of industry upgrading and transformation should focus on product portfolios, creating different single products for different scenarios, covering different consumer groups, and the market will place more emphasis on positioning in price bands and scenarios.