Relying on the main brand and generating 70% of revenue from Shandong, when will Tsingtao Brewery's '1+1' brand strategy take effect?

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On March 27, Tsingtao Brewery (600600.SH/0168.HK) released its 2025 annual report, showing revenue of 32.473 billion yuan, a year-on-year increase of 1.04%; net profit attributable to shareholders of the listed company was 4.588 billion yuan, a year-on-year increase of 5.6%.

Behind the dual growth in revenue and net profit lies the pressure of Tsingtao Brewery’s slowing performance growth. From 2022 to 2024, Tsingtao Brewery's revenue growth rates were 6.65%, 5.49%, and -5.3%, respectively; net profit growth rates attributable to shareholders of the listed company were 17.59%, 15.02%, and 1.81%, respectively.

In response to weakening consumer demand in the beer industry, how will Tsingtao Brewery sustain its growth?

The main brand contributes 70% of revenue

Tsingtao Brewery adheres to the brand strategy of 'Tsingtao Beer as the main brand and Laoshan Beer as the national secondary brand.' In its financial report, Tsingtao Brewery stated that its products primarily target the mid-to-high-end beer consumption market for promotion and sales, while other brand products, represented by Laoshan Beer, focus on mass-market sales.

In 2025, the Tsingtao brand achieved a product sales volume of 4.49 million kiloliters, representing a year-on-year increase of 3.5%, while other brands sold 3.15 million kiloliters, marking a year-on-year decrease of 1.36%. In terms of revenue, the Tsingtao brand generated 22.382 billion yuan in 2025, up 1.35% year-on-year, whereas other brands brought in 9.448 billion yuan, reflecting a 0.5% decline. The gross profit margins were 46.84% and 29.57%, respectively.

Based on these calculations, the Tsingtao brand contributed 58.77% of total sales volume but accounted for 70.32% of revenue; other brands contributed 41.23% of sales volume but only 29.68% of revenue.

Looking at a longer time frame, the growth rate of the Tsingtao brand consistently exceeded that of other brands, meaning the Tsingtao brand has become the primary driver of Tsingtao Brewery's growth. From 2022 to 2024, the Tsingtao brand’s revenue was 21.417 billion yuan, 23.263 billion yuan, and 22.083 billion yuan, with respective year-on-year growth rates of 8.19%, 8.62%, and -5.07%; other brands’ revenue was 10.28 billion yuan, 10.143 billion yuan, and 9.495 billion yuan, with respective year-on-year growth rates of 4.09%, -1.34%, and -6.38%.

Meanwhile, as the mainstay of Tsingtao Brewery's mid-to-high-end market strategy, the slowdown in the Tsingtao brand’s growth also somewhat affected its performance in the mid-to-high-end segment. However, Tsingtao Brewery did not disclose revenue figures for mid-to-high-end beers, only mentioning that products above the mid-to-high-end level achieved sales of 3.318 million kiloliters, a year-on-year increase of 5.2%.

At the same time, the 'self-indulgence' consumption trend in the beer industry is becoming increasingly prominent, with consumer demands shifting from purely functional satisfaction to spiritual experience and self-expression. While pursuing premiumization, health-consciousness, personalization, and scenario-based options, consumers are placing greater emphasis on both quality-price balance and emotional value, showing an ever-growing preference for high-quality products. They favor practical choices that offer 'good quality at a fair price' and are willing to pay for products that align with their aesthetics and lifestyle.

In its financial report, Tsingtao Brewery stated that it is accelerating the implementation of its '1+1+1+2+N' product strategy to optimize its brand portfolio and upgrade its product mix, while fostering flagship products and innovative categories. According to a research report by China Postal Securities, the '1+1+1' refers to Classic, Pure Draft, and White Beer, which serve as the core product combination ensuring growth. These products are promoted across all regions and channels to support volume and profitability. The '2' represents Premium Original Wort and Crystal Pure Draft, which aim to fully capture the fresh beer market through innovative operational models and create star products in this category. The 'N' includes brands such as Augustiner, Laoshan Premium, and canned products.

In addition, Tsingtao Brewery mentioned that it is strategically expanding into cutting-edge fields like 'beer + biotechnology + health,' promoting the development of new categories and segments, including 'whole grain, craft beer, zero-sugar low-calorie, and non-alcoholic or low-alcohol' offerings.

Clearly, Tsingtao Brewery is seeking new growth through diversification.

Notably, Tsingtao Brewery also attempted to enter the rice wine sector through acquisition. In May 2025, Tsingtao Brewery announced its plan to acquire 100% of Jimo Rice Wine's equity from Xinhua Jin Group and Lu Jin Group for a consideration of 6.65 billion yuan.

Tsingtao Brewery stated that Jimo Rice Wine operates in the same fermented alcoholic beverage industry as the company. With the addition of Jimo Rice Wine, it will further enrich the company’s product portfolio, expand market channels, and provide consumers with more diversified choices.It aims to create synergies with the company’s existing strong markets and resources in terms of brand and product promotion, sales networks, and channels, further expanding market influence. In terms of market seasonality, 'Jimo Old Wine' can complement the company’s beer products, creating a more competitive cross-category product mix. This will consolidate the company’s traditional product market position while opening up new growth areas, injecting new momentum into the company’s development.

In October 2025, Tsingtao Brewery issued an update announcement stating that due to the failure to meet the closing prerequisites stipulated in the 'Equity Transfer Agreement,' the equity acquisition transaction was terminated.

Still primarily focused on the Shandong market

In 2018, Tsingtao Brewery began promoting a 'one vertical, two horizontal, one circle' strategy, emphasizing the consolidation of key advantageous markets while enhancing the penetration of premiumization into other regional markets. The 'one vertical' refers to revitalizing coastal markets; the 'two horizontal' pertains to the Yellow River market strategic belt and the liberation of Yangtze River markets; the 'one circle' refers to strengthening the Greater Shandong base market circle.

In its 2025 financial report, Tsingtao Brewery stated,The implementation of refined operations in traditional advantageous markets along the Yellow River has further solidified the company’s market-leading position, continuously strengthening market share and profitability. The effect of contiguous development in northern markets has become increasingly evident. In southern markets, continuous optimization and improvement of product structure have been achieved through positive accumulation, focusing on regional and channel breakthroughs to achieve quality-driven growth.In overseas markets, steady progress has been made in implementing the 'one arc, three wings, multiple points' market layout through product innovation, regional expansion, brand reinforcement, model breakthroughs, and strategic upgrades. For the first time, localized production and sales were achieved in international markets, continuously enhancing the brand’s global influence.

Currently, nearly 70% of Tsingtao Brewery's revenue still comes from its home base in Shandong.In 2025, Tsingtao Brewery's revenue from the Shandong region reached 22.324 billion yuan, a year-on-year increase of 1.04%, accounting for 70.14% of its beer revenue.

During the same period, Tsingtao Brewery's revenue from the North China region was 7.864 billion yuan, up 0.78% year-on-year; revenue from South China was 3.417 billion yuan, an increase of 1.18%; revenue from East China was 2.592 billion yuan, growing by 3.81%; revenue from Southeast China was 668 million yuan, down 0.83%; revenue from Hong Kong, Macao, and other overseas regions was 581 million yuan, an increase of 6.84% year-on-year.

In terms of gross margin, Shandong also showed the highest performance. In 2025, the gross margins for Shandong, North China, South China, East China, Southeast China, Hong Kong, Macao, and other overseas regions were 38.04%, 31.89%, 33.98%, 29.35%, 19.93%, and 32.88%, respectively.

This suggests that Tsingtao Brewery still needs to make continuous breakthroughs in the southern market.

In this earnings report, Tsingtao Brewery also introduced its 'Five New' business initiatives for the first time: new products, new channels, new demographics, new scenarios, and new demands.Tsingtao Brewery stated that the company will fully push forward with its 'Five New' business strategy to carve out new growth spaces. The company will focus on emerging channels such as online sales and instant retail while refining offline channel operations. It aims to expand into high-value consumption scenarios and optimize its 'Fresh Direct Delivery' business structure. The company will also promote a dual-matrix construction of 'classic renewal plus trendy breakout,' targeting new demographics like Generation Z, women, and the new elderly, achieving deeper alignment between consumer groups, products, and scenarios through functional product development and brand contextualization.

Through the development of new channels, it remains to be seen whether Tsingtao Brewery can further expand its presence outside Shandong. However, currently, distributor confidence in Tsingtao Brewery may have somewhat declined. In 2025, the net cash flow generated from operating activities amounted to 4.593 billion yuan, a year-on-year decrease of 10.91%. The company attributed this mainly to a reduction in cash received from sales due to changes in advance payments. Additionally, as of December 31, 2025, Tsingtao Brewery's contract liabilities stood at 7.674 billion yuan, down 7.68% year-on-year.

Premiumization becomes a competitive advantage.

At present, the beer industry has entered a state of stock competition.

According to data from the National Bureau of Statistics, China's cumulative beer production by large-scale enterprises reached 35.36 million kiloliters in 2025, a year-on-year decrease of 1.1%, marking the second consecutive year of decline.

The China Alcoholic Drinks Association stated that in the first three quarters of 2025, large-scale beer enterprises in China achieved both volume and price growth, with total profits increasing significantly year-on-year. This reveals the core characteristics of the current beer market: stable overall volume but a leap in value. The top five companies in the industry accounted for over 84% of production and sales, with their revenue and profit shares also continuing to rise.This means that the industry's growth dividends are increasingly flowing to leading enterprises that can successfully implement premiumization and efficiency strategies.

From an industry perspective, major beer players are focusing on premiumization. In its financial report for 2025, Budweiser Asia-Pacific noted that its high-end and super-premium product portfolio accounted for more than two-thirds of its total revenue and contributed over 20% of revenue growth.

In 2025, CR Snow Beer achieved a beer sales volume of approximately 11.03 million kiloliters, representing a year-on-year increase of 1.4%. Sales of mid-to-high-end beers grew at a medium-to-high single-digit rate, accounting for nearly 25% of total sales. Sales of mainstream high-end and above beers grew by nearly 10 percentage points year-on-year. Notably, Heineken NV Sponsored ADR recorded nearly 20% growth despite a high base, Snowflake beer sales surged by 60%, and Amstel beer sales doubled compared to the same period last year.

Tsingtao Brewery, one of China’s top three beer companies, mentioned in its financial report that products like the Tsingtao Classic series, white beer, and ultra-premium series continued to hit record-high sales, with rapid growth in white beer sales, ranking first in the industry's white beer category. However, given the overall slowdown in growth, its premiumization efforts may have faced certain obstacles.

It is worth noting that the China Alcoholic Drinks Association highlighted that for Chinese beer companies to navigate cycles and achieve sustainable growth, they need to focus on three strategic directions: First, operational efficiency—through digital transformation, supply chain integration, and cost optimization, enhancing profitability and risk resistance in a competitive market with limited growth. Second, innovation and diversification should be aligned with localization and health trends. Third, international expansion should progress steadily, as China’s beer internationalization is still in its early stages.

Starting from the end of 2024, Tsingtao Brewery underwent a management transition. In December 2024, Huang Kexing retired and stepped down from his positions as chairman, executive director, and chairman of the board’s strategy and investment committee.Jiang Zongxiang took over as chairman and concurrently serves as president, bringing extensive experience in corporate governance, strategic management, digital transformation, supply chain management, and production operations within the beer industry.

In January 2026, Wang Yan was appointed as vice president, bringing rich practical experience in human resources management and enterprise operations. In March, due to internal work reassignments, Cai Zhiwei resigned from his position as marketing president, and his role was taken over by Li Hui, the vice president, who has deep expertise in corporate strategic management, digital transformation, and marketing.

From the perspective of management's experience, Tsingtao Brewery is accelerating changes in channels, marketing, and digitalization.

In 2025, although Tsingtao Brewery achieved dual growth, the deceleration trend remained unchanged; the results of the dual-brand strategy were mixed, with regional markets still heavily reliant on Shandong. Against this backdrop, the management completed its transition and proposed the 'Five New' initiatives. In an environment where the beer industry has entered a phase of stock competition and high-end benefits are concentrating among leading players, it remains to be seen how Tsingtao Brewery will consolidate its strong market position while advancing product mix optimization and nationwide expansion.

Author | Wu Ren

Source | Zhengtan Finance (ID: teccj6)

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