China: Tsingtao posts fastest annual profit growth since 2010

China’s Tsingtao Brewery Co Ltd, the country’s second largest brewer, posted a 21 percent jump in annual profit on March 27, short of forecasts but still the firm’s fastest profit growth since 2010 as it reined it costs, Reuters reported.

The brewer said its 2017 net profit jumped to 1.26 billion yuan ($200.80 million). That compared with an estimate of 1.45 billion yuan from a Reuters poll of 14 analysts.

China is the world’s largest beer market by sales, but volumes have been slipping and profit margins are razor thin amid fierce competition between local firms and beer giants AB InBev, Heineken NV and Carlsberg.

Local rival China Resources Beer posted a 4.4 percent rise in annual pre-tax profit on Wednesday, benefiting from an increase in sales volumes and average selling prices, as well as a focus on higher margin premium beers.

Brewers are increasingly looking to push upmarket into premium and craft beers that are more popular among China’s younger urban middle class drinkers.

Tsingtao and CR Beer both raised prices of some products at the start of the year in response to higher packaging, raw material and labour costs.

Tsingtao said its revenue last year rose 0.65 percent to 26.28 billion yuan, roughly in line with forecasts.

Local conglomerate Fosun International took a stake in Tsingtao in December last year, after Japan’s Asahi Group Holdings said it would sell off its entire 19.9 percent stake in Tsingtao for over $900 million.

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