Blue Whale News, November 8th (Reporter Zhu Xinyue), Bud APAC's management in China underwent major adjustments, with Fabio Sala taking over as president, aiming to reverse the declining trend in China's market performance.

Management Changes

On November 8th, media reported that Fabio Sala has been appointed as the president of Budweiser China after a three-year vacancy. He will report directly to Bud APAC's CEO Jan Craps. At the same time, Luke, Chief Sales Officer for China, will be promoted to Budweiser Group as Vice President of Global Strategy; Jeff, President of Budweiser China East Business Unit, will take over Luke's position and report to the new president, Fabio Sala.

It is worth noting that despite Budweiser not immediately confirming the aforementioned personnel changes during an interview with Blue Whale News, industry insiders close to Budweiser have confirmed the authenticity of this news to reporters. This further highlights the importance and sensitivity of this personnel adjustment within Budweiser China.

It is understood that Budweiser China includes multiple legal entities operating in the Chinese market, directly or indirectly owned by Bud APAC (01876.HK). Bud APAC was previously the Asia-Pacific subsidiary of the world's largest beer company, Anheuser-Busch InBev. In 2016, Anheuser-Busch InBev acquired the world's second-largest beer brewing company, South African Millet (SAB Miller), for over 100 billion US dollars, becoming a beer industry giant. In 2019, Anheuser-Busch InBev spun off Bud APAC for a Hong Kong IPO to strengthen its presence in the Asia-Pacific market. Currently, Bud APAC's main markets include China, South Korea, India, and Vietnam, with major brands such as Budweiser, Stella Artois, Corona, Hoegaarden, Cass, and Harbin.

Among the three individuals involved in the above job changes, Fabio Sala, 47 years old, has been serving as president of Budweiser Group in Belgium, the Netherlands, France, and Luxembourg markets since July 2020, bringing extensive international management experience and deep industry insights. Luke, a senior employee within the Budweiser system, has held roles such as Vice President of Strategy and Business Transformation, Vice President of Commerce for China Business Unit, and President of Budweiser China South Business Unit, accumulating rich sales experience. Jeff, also a long-term employee at Budweiser, has held various market leadership positions since 2010 in Western, Northeastern, Southern, and Eastern China.

It is evident that Budweiser is attempting to further drive its sales growth and business expansion in the Chinese market by introducing leaders with extensive international management experience and industry insights, as well as promoting senior employees who have deep local market expertise.

Can it be a turning point?

Since the beginning of the year, Bud APAC's performance in china has failed to meet expectations. Industry experts interviewed by Blue Whale News pointed out, "There is currently no obvious improvement signs."

From the 2023 financial report, Bud APAC's performance significantly depends on the performance in the china market. In full-year 2023, Bud APAC's revenue was $6.856 billion, an 11.1% year-on-year increase, with revenue per hectoliter increasing by 6.2%; sales reaching 9.28 billion kilograms, nearly 4.6% year-on-year growth; normalized EBITDA profit before tax, interest, depreciation, and amortization was $2.023 billion, up 10.8% year-on-year.

In the china market, total revenue and revenue per hectoliter increased by 12.8% and 8.1% respectively, with normalized EBITDA profit before tax, interest, depreciation, and amortization skyrocketing by 17.4%, and profit margin expanding by 132 basis points.

However, entering 2024, Bud APAC's china market encountered continuous challenges.

In the first half of this year, Bud APAC's beer total sales volume was 4.657 billion liters, a 6.2% year-on-year decrease; achieving revenue of $3.399 billion, a 4.3% year-on-year decrease; Bud APAC's shareholders' profit attributable to equity holders decreased from $0.575 billion in the first half of 2023 to $0.541 billion in the first half of 2024.

Regarding the decline in performance in the first half of the year, Bud APAC attributed it mainly to the performance of the Chinese market in the second quarter. Bud APAC stated in its financial report that in the second quarter of 2024, total sales volume and revenue decreased by 7.3% and 7.8% respectively, with revenue per hectoliter remaining stable. "The reason is due to heavy rainfall in Guangdong and Fujian provinces, where most of the high-end business is concentrated."

By the third quarter, despite the boost from the Olympics and the UEFA Euro, Bud APAC still felt the impact of the "continuous downturn in the china industry." Sales volume decreased by 8.1% to 7.12 billion liters in the first three quarters, revenue decreased by 6.1% to $5.104 billion, and shareholders' profit attributable to equity holders decreased from $0.879 billion in the same period last year to $0.777 billion. Net revenue in the china market fell by 14.1% year-on-year, with sales decreasing by 10.6%. Especially in the third quarter, the china market saw "weakened consumer willingness, especially slowing foot traffic and consumption in dining channels, leading to a 14.2% decline in sales and a 16.1% drop in revenue."

To a large extent, the performance of the china market directly influences the overall performance of bud apac, therefore, when facing performance challenges, bud apac chooses to adjust the management structure of china region in an attempt to launch a powerful combination to reverse the situation. This is likely to be the core motivation for the aforementioned personnel changes.