Guotai Junan: Beer Industry Landscape Evolution Welcomes Economic Opportunities, Organizational Differences Exacerbate Differentiation.

Guotai Junan releases research report, stating that the competition in the beer industry is mild and the inventory level for the New Year is relatively healthy. Combining feedback from channels, foreign brands such as AB InBev, Heineken, and Carlsberg may reduce their expenditure on large-scale activities by 2025, or focus more on profit-oriented initiatives, leading to a relatively mild overall competitive situation in the industry. It is expected that competition will still focus on new product launches and merchandising support, rather than vicious competition. The evolution of the beer industry landscape from 2025 to 2026 will bring opportunities for local market prosperity, benefiting Tsingtao Brewery, Yanjing Brewery, and Zhujiang Brewery; it is expected that by 2025, Tsingtao Brewery will see a significant improvement in prosperity, Yanjing Brewery will accelerate expansion outside its province, and Zhujiang Brewery will maintain high levels of prosperity, while foreign brands may continue to decline or slow down. Key points from Guotai Junan: Opportunities for prosperity with changes in the landscape. Looking back at the past four years from 2020 to 2024, the industry's competitive landscape has quietly changed. The agency expects that: 1) In the Guangdong market, AB InBev's market share by sales volume is expected to decline from 20-30% in 2020 to about 20% in 2024, while Zhujiang Brewery will maintain continuous growth and remain the top market share position (30% or higher); 2) In the Fujian market, AB InBev's market share may contract from 70-80% before 2020 to less than 60% in 2024, while CR Snow/Heineken may increase their share from around 10% to over 25%; 3) In the northern market, Yanjing Brewery's market share continues to increase in Beijing, Hebei, and certain local markets, while CR Snow and Tsingtao Brewery experience varying degrees of contraction. The main reasons behind this are: 1) reduction in high-end scenarios and shift in dining scenarios, 2) differences in management capabilities and organizational cultural mechanisms. The agency believes that the organizational restructuring effect in 2025 will further intensify differentiation in the landscape, bringing opportunities for local market prosperity. By 2025, the agency predicts changes in the competitive landscape (by sales volume): a decrease in market share for AB InBev, stable or slightly decreased market share for CR Snow and Tsingtao Brewery, and an increase in market share for Tsingtao Brewery, Zhujiang Brewery, and Yanjing Brewery. No significant downgrade in structure, differentiation intensifies as the industry continues the trend from the past 24 years. According to feedback from various channels, in the backdrop of insufficient consumption power in 2024, the beer industry did not show a clear sign of consumption downgrade, with consumption groups in various price ranges relatively stable, but with a decrease in consumption frequency and an increase in home consumption scenarios, resulting in a reduction in low-end consumption. Assuming that the consumption power in 2025 is maintained from 2024, the agency predicts that the industry's product structure will remain stable or slightly upgraded. The probability of an upgrade is higher in the 8 RMB price range, while the prosperity of the 10 RMB and above price range is highly positively correlated with the CPI level. A decrease in the 6 RMB and below price range will lead to a passive upgrade in the structure. The agency believes that Tsingtao Brewery will undergo significant positive changes in 2025, Yanjing Brewery is expected to accelerate outside of Beijing, Zhujiang Brewery will maintain growth above the industry average, while other brands are expected to continue the prosperity trend from 2024: AB InBev may continue its decline, Carlsberg/CR Snow will stay stable, and CR Snow's major brands will achieve growth but at a slower pace. The competition in the beer industry is mild and the New Year's inventory level is relatively healthy. Combining feedback from channels, foreign brands such as AB InBev, Heineken, and Carlsberg may reduce their expenditure on large-scale activities by 2025, or focus more on profit-oriented initiatives, leading to a relatively mild overall competitive situation in the industry. The agency predicts that the competition will continue to focus on new product launches and merchandising support, rather than vicious competition. Tsingtao Brewery and Yanjing Brewery are expected to increase their expenditure proportionally in local markets (expansion areas), but will not carry out large-scale activities nationwide. According to channel feedback, the New Year's inventory pace in 2025 is generally within the normal range, without large-scale inventory backlog; the inventory in the Beijing area of Yanjing Brewery is lower than the level in the same period in 2024, Tsingtao Brewery in Shandong is at the historical average level, Zhujiang Brewery in Guangdong is stable, and Heineken in Fujian has increased its replenishment compared to the previous period. Risk warning: fluctuations in costs, impact of extreme weather conditions, changes in consumer habits.