China: Tsingtao Brewery reports 43% jump in net profit last year

Tsingtao Brewery, China's No. 2 beer maker, reported a 43% jump in net profit to a record 3.1 billion yuan ($486 million) last year, thanks to growth in its top-end segment, the Nikkei Asia reported on March 29.

Earnings released on March 29 show a 9% rise in sales to 30.1 billion yuan. Sales of mid- and high-end Tsingtao beers grew 14% by volume as the company launched a variety of beverages with different production methods and flavor profiles. The brewer has continued this strategy in 2022 with the debut of its "Century Legend" drink.

"The company has maintained its competitive advantages in mid- to high-end markets," the earnings report said.

Domestic market leader China Resources Beer (Holdings), known for its Snow brand, also booked its highest annual sales and net profit since the company began reporting results in yuan terms in 2016.

But the recent wave of coronavirus cases in China has clouded this year's outlook for what is by far the world's largest beer market. Shanghai, a major consumption center, has entered a staggered lockdown, while bars and restaurants elsewhere in the country have closed.

Input costs are a concern as well.

"The clash between Russia and Ukraine has raised wheat and packaging prices," China Resources Beer CEO Hou Xiaohai said.

Tsingtao said it will lower costs through more efficient production and operations.

Chinese beer production peaked in 2013 and has remained on a downward trend since. Output fell 5% in 2021 compared with 2019, before the coronavirus pandemic, but improved 4% from 2020, according to China's National Bureau of Statistics.