Hong Kong-listed China Resources Beer (Holdings) – the maker of China’s Heineken beer and Snow, the world’s best-selling beer by sales – is to expand its high-end production capacity of Heineken after posting a strong performance in the first half of this year.
Hou Xiaohai, chief executive of China Resources Beer, said on Wednesday although the group expects a continuous drop of 6 to 7 percent in the Chinese mainland’s beer sales in the second half, it’s confident and determined to develop China’s top-end beer market.
Although the group expects a continuous drop of 6 to 7 percent in the Chinese mainland’s beer sales in the second half, it’s confident and determined to develop China’s top-end beer market
Hou Xiaohai
chief executive of China Resources Beer
Announcing the company’s interim results, he said the brewer will attach great importance to Heineken’s development as part of the thrust into that market.
China Resources Beer saw a strong 11.1 percent year-on-year growth in profit attributable to shareholders at 2.08 billion yuan, and a 6 percent gain in EBITDA (earnings before interest, taxes, depreciation and amortization) profit.
Amid the COVID-19 pandemic, the brewer’s turnover fell 7.5 percent year-on-year to 17.4 billion yuan in the first half.
Last year, China Resources Beer acquired Dutch brewer Heineken’s business in China, including the Hong Kong and Macao special administrative regions.
Fueled by the strong performance of Heineken beer, the company recorded an increase of 2.9 percent in beer sales of sub-high-end and above, compared with the same period in 2019.
Hou attributed the rebound in the second quarter to the pandemic tapering off, with most retail and restaurant sales back on track.
The hot weather and a “compensatory consumption” mindset after lockdowns also contributed to the recovery, he said.
Although just 20 to 30 percent of nightlife beer consumption has resumed, Hou expressed optimism in the company’s performance in the second half, and predicted that sales will remain stable.
However, due to the serious flood situation in some major markets along the Yangtze River in central China, he said there won’t be any explosive growth in the mainland’s beer sales for the rest of the year, with an overall 6 to 7 percent drop for the whole industry.
China Resources Beer closed two breweries by late June, with 72 breweries now operating in 25 provinces. Annual production capacity stood at 19.6 million kilograms.
The brewer will continue optimizing its production capacity, shutting down two or three breweries in the next few years, and focusing on high-end production of Heineken beer, said Hou.
