Recently, Chongqing Brewery (600132.SH) released its annual report for last year. Throughout the year, the company achieved a total revenue of 14.815 billion yuan, a year-on-year increase of 5.53%; it realized a net profit attributable to the parent company of 1.337 billion yuan, a year-on-year increase of 5.78%.

At the same time, the company's sales growth exceeded the industry average. Last year, the company achieved a beer sales volume of 2.9975 million kiloliters, a year-on-year increase of 4.93%. Data from the National Bureau of Statistics shows that in 2023, the beer production of large-scale enterprises in China only slightly increased by 0.3%.

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This is also the sixth consecutive year since 2018 that Chongqing Brewery has achieved comprehensive growth in sales, revenue, and profit.

There are still some indicators worth paying attention to in this performance report. In the fourth quarter of last year, the entire beer market was under pressure. Data from the National Bureau of Statistics shows that from October to December 2023, domestic beer production increased by 0.4%, decreased by 8.9%, and decreased by 15.3% respectively.

Specifically, in the fourth quarter of last year, Chongqing Brewery's performance also faced some tests. The annual report shows that in the fourth quarter of last year, the company's operating income was 1.786 billion yuan, a year-on-year decrease of 3.76%. This is not an isolated case in the industry. For example, Budweiser APAC (01876.HK)'s performance shows that in the fourth quarter of 2023, thanks to high-end and brand structure, channel recovery, the Chinese market's single-quarter revenue increased by 11.1%, but market sales volume decreased by 3.1%.

In recent years, the entire beer industry has been focusing on high-end products, but is the industry's high-end process facing a test?

At the Chongqing Brewery performance communication meeting, Chongqing Brewery President Li Zhigang told the First Financial reporter that from the market perspective, the beer industry consumption was strong in the first half of last year, but there was a downward trend in the second half of the year, mainly focusing on inventory digestion in the second half of the year. Overall, the performance of the beer industry throughout the year was stable. The external environment may affect the sales of some super high-end beer products. For the company, there is currently some impact, but it is still within a controllable range.

In Li Zhigang's view, the high-end process of the entire beer industry has not changed at present.

"In 2019, our high-end product proportion was about 35%, and by last year, the proportion had approached 48%. The increase in the proportion of high-end products has brought us a considerable performance return. There is still a lot of room for development in the high-end of the entire beer industry. The high-end of the beer market is not just about high product prices, but also about how to provide consumers with better products." Li Zhigang said.

In 2023, the sales volume of Chongqing Brewery's high-end products increased by 3.98%.Chongqing Beer is currently exploring how to launch high-end beer products with a higher cost-performance ratio, such as focusing on canned beer products.

"For example, bottled 1664 may be sold for 40 yuan per bottle in bars, which some consumers may find too expensive. If canned products are sold through other channels, perhaps they could be priced at only 11 yuan or even 9.9 yuan. In this way, people might perceive the canned products as having a prominent cost-performance ratio," said Li Zhigang. He indicated that the company's overall share of canned products has increased from 15% to 22%, and compared to the 40% share of canned beer in the overall market, the company still has significant room for improvement.

Among the beer brands sold by Chongqing Beer, there are both international and local brands. In terms of sales volume, local brands remain the mainstay. In the company's total sales volume for 2023, local brands accounted for more than 70%. In regional markets, this proportion is even higher; for instance, in the Chongqing market, the two major local brands, Chongqing and Shancheng, account for nearly 80% of the company's sales.

Li Zhigang stated that the current overall environment will not affect the company's marketing investment, and the company will continue to consolidate its entire sales network.

Chongqing Beer is also continuing to focus on local brands. It is reported that the next national brand the company aims to build has been confirmed as the Chongqing brand. The company has also clearly proposed to promote Chongqing Beer nationwide, by deeply integrating with Chongqing hot pot to strengthen the consumer perception of "eating Chongqing hot pot, drinking Chongqing Beer."