---
title: "Who Will Become China's Beer King?"
description: "In 2022, while baijiu, wine, and yellow wine collectively declined, only the beer industry achieved overall growth. The three local beer giants—China Resources Beer, Tsingtao Brewery, and Yanjing Beer—all saw significant profit increases. This steady recovery has continued into this year. The new cycle of beer has finally arrived. China has long been the world's largest beer market, with a lively competition among the top five players. However, local leading players that have grown on the back of this huge market have yet to form global influence. In the future, if possible, who could become China's version of the beer king..."
author: "杨伟"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2023-06-20"
language: "en"
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# Who Will Become China's Beer King?

> In 2022, while baijiu, wine, and yellow wine collectively declined, only the beer industry achieved overall growth. The three local beer giants—China Resources Beer, Tsingtao Brewery, and Yanjing Beer—all saw significant profit increases. This steady recovery has continued into this year. The new cycle of beer has finally arrived. China has long been the world's largest beer market, with a lively competition among the top five players. However, local leading players that have grown on the back of this huge market have yet to form global influence. In the future, if possible, who could become China's version of the beer king...

In 2022, while baijiu, wine, and yellow wine collectively declined, only the beer industry achieved overall growth. The three local beer giants—China Resources Beer, Tsingtao Brewery, and Yanjing Beer—all saw significant profit increases. This steady recovery has continued into this year.
**The new cycle of beer has finally arrived.**
China has long been the world's largest beer market, with a lively competition among the top five players. However, local leading players that have grown on the back of this huge market have yet to form global influence.
In the future, if possible, **who could become China's version of the beer king, representing Chinese beer in the global arena?** What are the decisive factors?
**Premiumization**
China's beer production peaked in 2013 and has been declining since, hitting a trough in 2020. Although it has rebounded somewhat in the past two years, it is still about 30% below the peak. Per capita beer consumption in China has shown an overall downward trend.
The industry's performance growth in recent years owes much to premiumization.
On one hand, mid- and low-end products are being replaced by premium ones. For years, the high-end beer market was dominated by foreign brands such as AB InBev, Carlsberg, and Heineken. In recent years, local beers have begun to make their mark.
Take Snow Beer, the best-selling brand, as an example. The "big green bottle" that was once popular across the country is now hard to find, replaced by various pure draft and craft beers. The cheapest Snow Beer available at many outlets is now "Brave the World" (Yongchuang Tianya).
Additionally, overall price increases have occurred frequently in recent years. In 2022 alone, mainstream manufacturers including China Resources Beer, Tsingtao Brewery, and Carlsberg raised prices across all tiers. The ex-factory price of Brave the World increased by about 0.5 yuan, the retail price of Laoshan Beer rose from 3-4 yuan to 5-6 yuan, and Lebao, Chongqing Beer, and Wusu saw increases of 3%-8%, among others.
Just a few years ago, beer prices in the Chinese market were stable in the 3-5 yuan range; now, **the entire market has moved into the 6-8 yuan price band.**
Moreover, giants have launched thousand-yuan beers: China Resources Beer's "Li," Tsingtao Brewery's "Eternal Legend," and Budweiser's "Master Legend" are all attempts to break through the price ceiling.
Data from China Commercial Industry Research Institute shows that the consumption of high-end and ultra-high-end beer in China is expected to grow from 590,000 kiloliters in 2013 to 1.02 million kiloliters in 2023, with a compound annual growth rate of 5.6%, bucking the industry trend.
Tsingtao Brewery, with its strong high-end foundation, saw sales of mid-to-high-end and above products grow by 5% in 2022, far outpacing the company's overall growth. As a result, despite only a 6.65% increase in revenue, its non-GAAP net profit grew by 45.43%.
The lack of profitability due to insufficient premiumization has been a long-standing concern for China Resources Beer. By upgrading its own products and acquiring Heineken China, China Resources Beer gained a competitive edge, and since 2021, its net profit has surpassed that of Tsingtao Brewery.
In other words, **whoever dominates the high-end segment holds the industry's money printer.** On this front, can Budweiser and Carlsberg withstand the combined attack of China Resources Beer + Heineken, as well as Tsingtao and Yanjing?
**New Channels**
The rise of Helens has shown the beer industry the value of new offline channels. Beer manufacturers have opened physical stores in food streets and commercial areas across the country.
Tsingtao Brewery's TSINGTAO1903 beer bars have opened over 200 stores in 62 cities across 23 provinces, and recently launched differentiated innovative formats like Tsingtao Beer One Bottle Good and Tsingtao Fresh Beer Bar.
Yanjing Beer has followed suit, with over 300 Yanjing Jiuhao community taverns, and has opened several Lion King craft beer flagship stores based on its craft brand.
The fastest riser is Ublou. Even if you haven't encountered its stores, you've likely seen its iconic beer bags in barbecue scenes on social media.
Ublou positions itself as a "pioneering brand of craft beer house new retail," and through a franchise model, it has opened over 2,000 stores in 800 cities and counties nationwide in just a few years.
AB InBev also owns beer bars under brands like Boxing Cat and Goose Island, but on a smaller scale; China Resources Beer, unable to sit still, launched its own tavern brand Joy Brew last year.
If Helens is essentially a Starbucks for the night, then most of these beer manufacturers' stores are more like the beer industry's version of 1919, Jiu Bianli, Mingshi Family, or Huazhi Wine—**providing channels that are easier for consumers to access, rather than social venues for sitting down and drinking.**
Additionally, in recent years, major beer manufacturers have increased canning rates, boosting the rise of e-commerce channels.
These new channels have put pressure on beer manufacturers that previously adhered to sales radius and traditional channels. The first to feel the impact is the nightclub channel that AB InBev relies on.
After all, whether it's taverns or e-commerce, they improve service and communication with consumers in the short term, and in the long run, they embrace the younger consumer base.
So in this round, brands like Tsingtao Brewery, Yanjing Beer, and Ublou, which have caught the consumer trend, have gained a first-mover advantage in scenario-based consumption. More importantly, what this layout demonstrates is the ability to perceive market demand, seize industry opportunities, and switch business strategies.
**Diversification**
However, no matter how innovative the products or how channels evolve, under the current macro landscape, the growth expectations for total beer consumption remain unclear, and the industry cannot escape the era of stock competition.
In the current market environment, continuing to drive performance growth through overall price increases is unrealistic. Therefore, the overall growth space for the beer industry is likely very limited.
Thus, given the difficulty of going global, **limited diversification has become the most realistic growth path for local beer manufacturers.**
Tsingtao Brewery and Yanjing Beer were relatively early in entering the beverage market. Yanjing's Cha Xiaosheng and Tsingtao's Prince Seaweed Soda are somewhat well-known in their niche markets.
Although the bottled water and tea beverage markets are larger than beer, they are even more fiercely competitive. Tsingtao Brewery does not separately list its beverage segment, and Yanjing's water and tea beverage business shows no growth, with combined revenue of less than 100 million yuan.
They have both turned their eyes to the neighboring baijiu market, but they are still in the PPT-selling stage. The only one that has truly invested in baijiu is China Resources Beer.
At the end of 2022, China Resources Beer's subsidiary China Resources Wine Holdings spent 12.3 billion yuan to acquire a 55.19% stake in Jinsha Wine through capital increase and share purchase, creating the largest acquisition in the liquor industry in recent years.
Jinsha Wine owns two major brands, "Zhaiyao" and "Jinsha Huisha," with after-tax net profits of 1.315 billion yuan and 670 million yuan in 2021 and the first half of 2022, respectively, making it the third-largest sauce-flavored baijiu company after Moutai and Langjiu.
In 2022, China Resources Beer's revenue and net profit were 35.263 billion yuan and 4.333 billion yuan, respectively, while Tsingtao Brewery's were 32.172 billion yuan and 3.711 billion yuan, a relatively small gap.
If acquiring Heineken was the key to China Resources Beer surpassing Tsingtao in profitability, then with Jinsha Wine, now backed by China Resources' golden touch, officially consolidated, China Resources Beer's performance will leave Tsingtao and other followers far behind.
**Capital Power**
China Resources Beer's 10-billion-yuan controlling stake in Jinsha Wine is just an important step in its baijiu layout. Strategic investments in Shanxi Fenjiu, acquisition of Jingzhi Liquor, and participation in the mixed-ownership reform of Golden Seed Liquor have made China Resources a standout among baijiu giants.
Moreover, most of the operators of these assets come from China Resources Beer. The new general manager of Jingzhi Liquor, Gan Xiaofeng, was formerly the marketing head of China Resources Snow Beer in Hainan; after China Resources took over Golden Seed, the dispatched directors and supervisors were basically all from China Resources Beer, and China Resources Beer's helmsman Hou Xiaohai has spoken at important Golden Seed events multiple times.
In the future, **will China Resources integrate baijiu brands into China Resources Beer, just as it integrated the beer industry?**
With limited room for premiumization and sales growth, only by packaging baijiu—a business large enough and profitable enough—can China Resources Beer join the ranks of the world's top liquor companies, competing with Moutai, catching up with Diageo, and targeting AB InBev.
After all, capital operation is the ultimate weapon for achieving scale growth. The AB InBev we see today is actually a merger of five of the world's top ten beer companies: Anheuser-Busch, Interbrew, AmBev, SAB, and Miller.
Currently, among China's local beer giants, only China Resources possesses such capital operation capability.
After the "big fish eat small fish" phase, in 2016, the Chinese beer market saw five strong players competing, with market shares of 25.9% for China Resources Beer, 17.6% for Tsingtao Brewery, 16.2% for AB InBev, 10.0% for Yanjing Beer, and 5.0% for Carlsberg.
Five years later in 2021, the industry CR5 increased from 74.7% to 92.9%, with the market shares of the top five changing unevenly: China Resources Beer 31.0%, Tsingtao Brewery 22.3%, AB InBev 21.6%, Yanjing Beer 10.2%, and Carlsberg 7.8%.
If the market trend of "big fish eat big fish" continues, after a period of shifts, **the long-standing "five strong competition" pattern will evolve into "one superpower with multiple strong players"**: China Resources Beer will pull ahead of Tsingtao and AB InBev, while Yanjing Beer catches up, forming a 1+3 mainstream beer camp.


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