The Zhitong Finance App learned that Fangzheng Securities released a research report saying that there is still plenty of room for high-end beer and strong certainty. Currently, the beer industry's valuation is at a historically low level, which has ushered in value layout opportunities. Since '23, the market is concerned about the medium- to long-term trend of high-end beer due to the “deceleration of consumption upgrades under external economic pressure”. Currently, sector valuations are at a historically low level. There is still plenty of room for upgrading the beer structure in China. At the same time, the beer industry leaders have reached a consensus on “high-end high-quality development+profit demand”. Under the “product+channel+region” side's continuous promotion of beer industry upgrading, China's high-end beer industry is resilient and is expected to continue the upgrading trend under pressure from the external economic environment.

The market is pessimistic about high-end beer, and sector valuations have now fallen to a historically low level. Since 2018, the beer industry has fully entered a new stage of high-end production. Under the clear path of cost reduction - high-end, cost reduction - closing inefficient factories & layoffs + incentive optimization, the gross profit margin and profitability of wine companies have continued to improve. The beer sector's valuation has continued to decline since April 23. As of April 8, 2024, the beer sector had a cumulative decline of 28.7% compared to the beginning of 2023. According to Fangzheng Securities, the main reason is that under pressure from the external economic environment, market concerns about the escalation of beer consumption have increased (along with factors such as extreme weather and weak demand in '23).

Fangzheng Securities has reviewed the beer market in the US and Japan with the aim of solving two problems: 1) the overall high-end development process of the US and Japan beer industry; 2) the performance of the US and Japanese beer industry under external economic pressure.

Fangzheng Securities found that 1) The beer industry in the US and Japan both experienced a period of rapid increase in tonnage prices, which continued for a long time. The rapid increase in tonnage prices in the US and Japan lasted 20 to 10 years, respectively, and the corresponding range CAGR was 5.3%/6.8%, respectively. Subsequent developments are divided: the Japanese market: the increase in beer prices then slowed down, and prices fell slightly after 2000 due to deflation, but there were differences in performance between channels, and the price of beer for eating out still rose slightly; the US market is more resilient. After entering the maturity period, the tonnage price continued to rise (CAGR reached 2.1% from 1993 to 2023); 2) Under external economic pressure, the high-end beer market in the US and Japan still showed resilience. The US performed better than Japan (Budweiser increased CAGR by 3.7% in 8-12, a margin higher than CPI). Fangzheng Securities believes that there is a big difference on the supply side. The leading US high-end strategy has strong strength and rapid growth period. Through “accelerated innovation+high competition”, they can further increase concentration. Under pressure from the external economic environment, it can still promote structural upgrading through methods such as “price adjustment+promotion of new high-end products”. Looking at Japan, the high-end beer market is currently still positioned as a niche market. The main participants are “Suntory + Sapporo,” and Ryuichi & Ryuji's “Asahi+Kirin” promotion efforts are insufficient. However, under the promotion of Suntory, the share of high-end beer in the traditional Japanese beer market still increased from 3.5% in 2003 to 15.2% in 2017.

Fangzheng Securities believes that at present, China still has sufficient high-end space and strong certainty; the leaders have the strength of a high-end strategy and are expected to show strong resilience. Judging from the current stage of development, there is still a gap between the degree of high-end production (product structure+tonnage price) of China's beer industry and the developed market, and considering the factors of the high proportion of ready-to-drink channels in China and the large price difference between the current price bands, there should be more room for future upgrades. Fangzheng Securities believes that China's supply side is similar to the US. Leading wine companies have reached a consensus on high-end + profit claims. Under the new high-end cycle, 1) under cost pressure, direct price increases are more intense, the effects are more obvious, and subsidies are reduced; 2) responding to the new requirements of high-end competition on the “product+channel+region” side, leading wine companies have set up diversified product matrices and formed their main products; on the channel side, emphasis is placed on large customers and services, as well as terminal construction and service. Seize the high ground; make efforts to expand the high-end highland market on the regional side In addition, they continue to lead structural upgrades in their respective dominant markets. Therefore, Fangzheng Securities believes that the structural upgrading of China's beer industry is expected to show strong resilience.