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Five of the seven publicly traded beer companies in mainland China reported increased gross profit margins in the first quarter compared to the same period last year, as they shift focus toward premium products to boost profitability in a highly saturated market.
Among these five, Guangzhou Zhujiang Brewery, Beijing Yanjing Brewery, Chongqing Brewery, and Tsingtao Brewery all experienced a one percentage point rise in their gross profit margins during the first three months, based on their quarterly financial disclosures.
Overall, the industry remains profitable. The seven listed beer producers in China collectively earned a net profit attributable to shareholders of approximately ¥2.6 billion (around USD 390 million) in the first quarter, reflecting a 6.1 percent increase compared to the previous year.
Despite these positive financial results, China’s beer production has declined for two consecutive years. Last year, output from large-scale breweries decreased by 1.1 percent year-on-year, reaching 35.3 million kiloliters.
As the market becomes increasingly saturated, beer companies are emphasizing the off-premises market—where consumers purchase but do not consume at the point of sale—and are upgrading product quality to sustain profit growth.
Tsingtao Brewery’s net profit attributable to shareholders grew by 5.2 percent in the first quarter from the same period last year, totaling about ¥1.8 billion (roughly USD 264 million). Sales of its mid-to-high-end beers outpaced those of its flagship Tsingtao Beer, which saw a modest 0.4 percent increase to 1.3 million kiloliters. Meanwhile, sales of the company’s premium products rose by 3.1 percent, reaching 1.04 million kiloliters.
Yanjing Brewery’s net profit skyrocketed by 60.2 percent in the first quarter, reaching approximately ¥265 million (USD 38.9 million). The company highlighted its ongoing efforts to upgrade its offerings toward the higher-end market.
Chongqing Brewery’s net profit fell by 7.4 percent year-on-year in the first quarter, totaling about ¥438 million (USD 64.4 million). Nonetheless, revenue from its main operations increased slightly by 0.2 percent to ¥4.2 billion (USD 617.5 million). Revenue from premium products increased by 2.4 percent to ¥2.6 billion, outperforming overall sales growth.
In an interview, Chongqing Brewery’s CEO noted that the catering channel continues to face challenges, and the shift toward off-premises consumption has been ongoing for the past two to three years. The company is increasingly concentrating on off-premises distribution channels such as supermarkets and online platforms.
“Our off-premises strategy involves three key components,” the CEO explained. “Firstly, to foster growth of major brands like Carlsberg, Tuborg, and Wusu; secondly, to reinforce our current market share; and thirdly, to develop future growth drivers, such as introducing one-liter canned beers as new flagship products.”
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