Tsingtao Brewery (0168.HK) announced a 75-85% year-on-year increase in its 2009 net profit to US$179-189 million. The brewer said the gain was due to improvements in brand integration and product mix, strengthened management and cost cutting. Beer sales by volume rose about 9% against 7.1% growth for the industry as a whole.
Tsingtao’s revenue growth is expected to remain strong through a combination of robust sales and refinements to the company’s product mix. At present, the Tsingtao Beer brand is sold nationwide and accounts for around half of total sales, with Laoshan, Sanshui and Hansi distributed regionally.
Sales volumes for China’s brewing industry have rebounded significantly since the economic downturn and Tsingtao is not the only player angling to increase its market share. CR Snow (a joint venture between China Resources Enterprise, 0291.HK, and SABMiller, SAB.LSE), Anheuser-Busch Inbev (BUD:NYSE, ABI.Euronext), and Yanjing (000729.SZ) are the principal competition. Boosted by last year’s strong sales and cheaper barley prices, these four brewers, who collectively make up to 50% of the market, may use their relatively strong cash positions to restart consolidation efforts, looking to absorb smaller, regional brewers and increase their nationwide footprints.
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