Henan, the last piece of cheese in China’s beer market

Currently, China’s beer industry has entered a stage of monopolistic competition led by the four giants: China Resources Snow, Anheuser-Busch InBev, Qingdao and Yanjing . Since around 2002, the four major beer giants have been aggressively staking their claim in the domestic beer market. Through various methods such as acquisitions, mergers, equity participation, and self-built production plants, they have formed a nationwide and intertwined market coverage network. According to relevant statistics At present, the domestic sales of the four major beer giants have accounted for more than 50% of the total capacity of the Chinese beer market.

After the four giants, there is the Second Army represented by Zhujiang, Jinxing, and Chongqing Beer. In addition, the foreign-owned Carlsberg Group, which has a dominant position in the west, will join (Carlsberg only has a shareholding in Chongqing Beer). The four representatives of the Second Army have been constantly looking for opportunities to expand the market in recent years, striving to become the first beer army in the country.

The overall pattern of China's beer market has been initially determined. As long as you open the map of China at any time, you can see the layout of domestic beer giants and even the world's beer giants at any time in almost all provinces in the country, even in the remote and far west. Entering figure. However, there is only one exception, and that is the Central Plains region - Henan, which has always been known as a battleground for military strategists.

Henan is the most populous province in the country (the population in 2009 was about 99.7 million and will exceed 100 million in 2010), and its beer consumption capacity is huge (industry media released figures, Henan beer production and sales in 2008 were about 330 million) million tons, ranking second among all provinces and cities in the country). However, in a province with such a large beer consumption, why have the beer giants not set up a branch to enter?

According to the industry, the reason why beer giants such as Snowflake and Qingdao have not entered the Henan market is mainly due to the following reasons: First, there are many beer brands in Henan, competition is fierce, and low-priced products are prevalent. Manufacturers generally have low profitability and are too unattractive to beer giants; secondly, due to Jinxing’s strong position in Henan Province (the largest market share in the province and claims to be fourth in the country), beer giants are unwilling to easily There was a head-on conflict with Jinxing; thirdly, some beer giants wanted to control the Henan beer market by acquiring Jinxing (for example, the former AB Company), but the acquisition was unsuccessful due to Jinxing's system and property rights issues.

However, what is the real situation of the Henan beer market today? What is the importance of the Henan beer market to the beer giants? What strategy is more appropriate for them to adopt to enter Henan? The following will analyze the research data on various aspects of the Henan beer market one by one as follows.

The current situation of Henan beer market: Venus leads the way, but the heroes are divided

Henan currently has about 22 beer brands and about 30 production plants, with a total production capacity of about 3.19 million tons and a production capacity of 200,000 tons. There are four companies with more than 1 ton: Venus, Wei Xue, Yueshan and Oak. In terms of the distribution of production plants, except for Xuchang and Puyang (the original Puyang Yinqiu has been in bankruptcy), basically every prefecture-level market must have at least one beer production plant (see the chart below for details).

Table 1: Overview of major beer brands in Henan Province in 2009

Brand production plant capacity branch plant put into operation 2009 sales volume

Golden Star

(Including Henan production plants only

) Zhengzhou main plant 400,000 tons - about 260,000 tons

Zhoukou Dancheng branch plant 100,000 tons, about 30,000 tons in 1999

Xinyang Huangchuan Branch Plant 100,000 tons, approximately 45,000 tons in 2002

Luohe Branch Plant 100,000 tons, approximately 50,000 tons in 2002

Anyang Neihuang Branch 10 10,000 tons, about 45,000 tons in 2002

Nanyang Dengzhou Branch 100,000 tons, about 60,000 tons in 2003

Sanmenxia Branch 50,000 tons, about 30,000 tons in 2004

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Venus has a total of 7 950,000 tons - about 520,000 tons

Weixue

(only Henan production plant

) Xinyang General Plant 300,000 tons - about 150,000 tons

50,000 tons in Gushi branch, about 30,000 tons in 2003

100,000 tons in Gongyi branch, about 20,000 tons in 2007

Weixue has a total of 3 units of 450,000 tons - about 200,000 tons

Yueshan Jiaozuo General Plant 220,000 tons - about 130,000 tons

Zhumadian Suiping Branch Plant 100,000 tons tons in 2004, about 40,000 tons

Yueshan totaled 2 320,000 tons - about 170,000 tons

Oke Zhengzhou General Plant 150,000 tons - about 80,000 tons

50,000 tons of Wuyang branch in Luohe, about 30,000 tons in 2004

50,000 tons of Tangyin branch in Anyang, about 10,000 tons in 2009

3 Aoke in total 250,000 tons - about 120,000 tons

Luoyang Palace Luoyang 200,000 tons - about 100,000 tons

Blue Brand Shangqiu 150,000 tons - about 80,000 tons

Hong Kong Xinxiang 150,000 tons - about 75,000 tons

Jiutouya Pingdingshan 100,000 tons - about 45,000 tons

Bianjing Kaifeng 70,000 tons - about 35,000 tons

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Tianguan Nanyang 80,000 tons - about 30,000 tons

Yuequan Zhumadian 70,000 tons - about 30,000 tons

Other brands in the province Nanjiecun/Kang Li/Hongqiqu/Hanshan/Maijia/Longmen/

Lanyu/Aoya/Maishida/Yuntaishan, etc., with a production capacity of about 400,000 tons and about 250,000 tons

Xuehua containing Low-end brands such as Shengquan are about 60,000 tons

Qingdao contains brands such as Laoshan/Hans/Shanshui, which are about 50,000 tons

Other brands outside the province except Snowflake and other high-end brands outside Qingdao And about 100,000 tons of mid-to-low-end brands

A total of about 30, about 3.19 million tons - about 1.87 million tons

Figure 1: Market share of major brands in Henan beer market in 2009

As can be seen from the above chart, the actual sales volume of the Henan beer market in 2009 was about 1.87 million tons, the actual sales volume of the provincial brands was about 1.66 million tons, the sales volume of the non-provincial brands was about 210,000 tons, and the actual sales volume of the provincial brands was about 210,000 tons. The total production capacity is about 3.19 million tons, and the actual capacity utilization rate is only 52%, which means it is in a serious state of overcapacity. There are 4 companies with actual sales volume of more than 100,000 tons, including Jinxing, Weixue, Yueshan and Aoke. Three companies with sales volume of less than 100,000 tons and more than 50,000 tons include Luoyang Palace, Blue Card and Aviation. The remaining 15 companies are all sales volume. Local small businesses below 50,000 tons. In terms of market penetration, currently there are only four brands including Jinxing, Weixue, Yueshan and Aoke that can cover the whole province. The other brands are mainly focused on sticking to and intensively cultivating the local market where the company is located.

Figure 2: Distribution map of major beer companies in Henan Province

Overview of the market development of major beer brands in Henan

Venus: Unifying the Central Plains, reality is still far from the dream< /p>

It can be seen from the data in 2009 that Venus is far ahead of other brands in Henan Province with a production capacity of 950,000 tons and a sales volume of approximately 520,000 tons, occupying approximately 29% of the market share in Henan Province, but This is still far from the 50% market share target set by Venus and the grand goal of unifying the Central Plains beer market.

Venus began its external expansion in 1998. Since 1998, Venus has successively selected four beer industries with relatively backward development levels and poor markets: Anshun in Guizhou, Dancheng in Henan, Hongdong in Shanxi, and Xianyang in Shaanxi. It is a market with broad prospects, few competitive companies, and is conducive to Venus's attack on the country from four directions. In 2000, Venus beer production reached 518,400 tons. In 2004, Venus’ “national-facing” eastern campaign kicked off with the investment from Nanjing Branch. Venus's nationwide layout, 16 branches are like a "giant dragon", with the dragon's head in Nanjing, Jiangsu, the dragon's body forming a "several" shape in Henan, Shan, Shaanxi, Sichuan, Gansu and other places, and the dragon's tail sweeping towards Yunnan and Guizhou.

However, Venus's "dragon" strategy is far from going as smoothly as it imagined. After the Jinxing Nanjing Branch was completed and put into operation in 2004, it has been in a state of substantial losses. Its market share in Nanjing has not exceeded 5% since the establishment of the factory. Faced with such competitive pressure and profitability, Jinxing had to cancel the Nanjing sales company in 2007 and transport the relevant production materials of the Nanjing branch back to the head office. The Nanjing branch ended in total failure. The other two branches, also located in the east, suffered from the same problem. The construction of the Shanghai branch was stillborn before it was put into practice, and the Guangzhou Zhongshan branch has been operating in a weak manner since its completion. At the same time, internal news came out that due to serious losses in some Jinxing companies, Jinxing contracted its branches such as Shandong Liaocheng Company and Shanxi Hongdong Company to internal executives for independent management in 2009. Jinxing Group The company headquarters mainly assesses its contracting profits, and the contractor is solely responsible for all other production and operations.

Jinxing’s current advantageous markets are still mainly concentrated in the central market, mainly Henan, and the western market, mainly Yunnan and Guizhou. Among the existing 16 companies in Venus, more than half are operating at a loss. Among the other three companies in the west, the Gansu company cannot effectively exert its power within the advantages of Huanghe Beer. The Chengdu company is under the heavy pressure of Xuehua and also faces competition from Qingdao and Jinwei in the same city. The Chengdu company has put into production It has been more than 4 years, but the market share in Chengdu still cannot exceed 5%. Shaanxi Xianyang Company is under the most advantageous Hans brand in Qingdao. It is difficult to succeed alone.

Leaving aside the companies outside the province of Venus, let’s look at the operating conditions of several companies in the Henan market, Venus’ most advantageous area. Jinxing's head office is located in Zhengzhou, the capital of Henan Province, with a production capacity of 400,000 tons and actual sales volume in 2009 of about 260,000 tons. Jinxing is currently the most profitable company in Henan Province. Considering the strategic layout of the province, Jinxing established Zhoukou Dancheng Branch in 1999, Xinyang Huangchuan Branch, Luohe Branch, Anyang Neihuang Branch in 2002, Nanyang Dengzhou Branch in 2003, and since 2004. In the form of leasing, Sanmenxia Weishan Beer was merged and established as Sanmenxia Branch.

The layout of seven production plants has effectively stabilized Jinxing’s position as the leader in the Henan beer market. However, the actual operations of the seven plants in the province are seriously uneven. The 260,000 tons of sales of Zhengzhou General Plant are mainly concentrated in Zhengzhou and Xuchang (about 140,000 tons in Zhengzhou and about 45,000 tons in Xuchang). The neighboring Luoyang area is occupied by the local brand Luoyang Palace Beer, and Venus has little to do here. ; Jiaozuo is occupied by Yueshan, the third largest brand in Henan, and Venus does not have much advantage at all; Kaifeng is the life-saving market of Bianjing, the local leader, and Shangqiu is the base market of Blue Brand. Venus is only in some county-level markets in these two areas It has certain performance, and its share in prefecture-level cities is less than 15%, and it does not have much advantage.

Among Jinxing’s six branches in the province, currently only two companies, Luohe and Nanyang, are doing well. Luohe Company is geographically connected to Zhengzhou and Xuchang, the advantageous areas of the main factory, and Luohe Company's advantages are fully demonstrated. Nanyang Company is located in the southwest corner of Henan, with relatively few competitors. Nanyang's local Tianguan Beer has no strong competitive advantage. Qingdao, Yanjing and Jinlongquan in Hubei have not yet had a strong performance in Nanyang. The Nanyang plant has achieved approximately Sales volume of 60,000 tons.

The Anyang production plant of Venus is located in northern Henan, the advantageous area of ??Yueshan and Aviation. Facing the strong competition from Yueshan and Aviation, Venus only operates in prefecture-level cities and some county-level cities in Anyang, Puyang, and Hebi. The market performed well, but it did not form an absolute advantage.

The Anyang factory is located at the junction of Henan and Hebei provinces. The Anyang factory of Venus originally performed well in the Hebei market when it was first established. However, due to the credibility issues of the Anyang factory among dealers in Hebei and the strength of Laoshan and Yinmai, Intervention, the current market of Venus in Hebei is basically in a state of decline. Jinxing's internal report in 2009 stated that the Anyang plant was operating at a loss. This also shows that the current survival pressure of Jinxing Anyang plant is not small.

Among the other three provincial branches of Jinxing, the Xinyang Huangchuan Factory is caught between the two sides of the Weixue Main Factory and the Gushi Factory. At the same time, it is facing a strong attack from the Anhui Xuehua Lu'an Factory. It's a lot of pressure. The Sanmenxia Factory has been in a long-term fierce battle with Hans Beer. With the nearby Shanxi Yuncheng Snowflake Factory put into operation in 2010, the Sanmenxia Factory is bound to face greater competitive pressure. The Zhoukou branch is the earliest branch established by Jinxing in the province. It has been nearly 10 years since its establishment in 1999. Since the establishment of the Zhoukou plant, during the glorious period from 2002 to 2005, it has achieved an annual sales volume of nearly 100,000 tons. However, in recent years, the Zhoukou branch has lost credibility among customers in the local market due to frequent changes in marketing executives. Snowflake has entered the Zhoukou market in a large scale, and coupled with the comprehensive decline in markets in neighboring Bozhou, Fuyang, and Lu'an areas of Anhui Province, the sales volume of the Zhoukou factory in 2009 has dropped to about 30,000 tons.

Looking at Jinxing's seven production plants in Henan Province, except for the main plant, Luohe plant and Nanyang plant, which are in profit, the other four production plants are all experiencing more or less losses. On the one hand, Jinxing's province-wide layout strategy is facing strong challenges from princes from all over the province, and on the other hand, it is facing strong pressure from beer giants to invade the Henan market from the surrounding areas. Jinxing's unification of the Central Plains beer market may become an increasingly distant phenomenon. dream.

Weixue: The first brand of mid-to-high-end beer in Henan Province, past glory

Weixue Beer was formerly the state-owned Xinyang Jigongshan Beer Co., Ltd., Jigongshan Beer was established in After the corporate restructuring in 2002, it was renamed Wei Xue Beer Group. From 2004, with the help of Anhui Vision Consulting Company, it was the first in Henan Province to focus on promoting Wei Xue mid-box beer with terminal positioning of 3-5 yuan. Before 2004, due to the influence of the early state-owned system, Weishe Beer's marketing ideas could not effectively integrate with the market. Its sales volume had dropped to about 100,000 tons, and the company had suffered losses for many years and was even on the verge of bankruptcy. What makes Wei Xue even more painful is that in 2002, Jinxing built a Xinyang branch with an annual output of 100,000 tons in Huangchuan County, located in the central Xinyang region. This undoubtedly made Wei Xue Beer's business even worse. . Under this situation, Wei Xue Beer had to establish a 50,000-ton production base in Gushi, the largest county in the east of Xinyang, and adopted a pincer attack strategy on Huangchuan Jinxing from the east and west.

Weixue was the first company to launch mid-range boxed products in Henan Province in 2004. It dared to be the first to eat crabs. On the one hand, it was a manifestation of the company's reform and enterprising spirit, and it was also a sign of operating difficulties. A helpless act. Moreover, Wei Xue’s move did not attract the attention of its main competitors, not even Jinxing and Yueshan, in the first two years (the top two selling brands in Henan at that time were Jinxing and Yueshan, and they were still busy at that time). Trying to grab the market share of 2-yuan products). Unexpectedly, Wei Xue achieved unexpected success. After two years of promotion and accumulation, in 2007, the sales volume of its products worth more than 3 yuan reached about 70,000 tons, and the provincial comprehensive sales volume reached about 23 million tons, and surpassed Yueshan Beer, becoming the second brand in the province in terms of comprehensive sales volume and the first brand of mid- to high-end boxed products.

There are two turning points in the upgrade of Henan beer product structure. The first time was around 2000, when brands represented by Venus Beer launched Venus Wheat Beer priced at 2 yuan, thus promoting a comprehensive transformation of the overall product structure of the Henan market from 1.5 yuan to 2 yuan. The launch of Jinxing Wheat Beer also led to Jinxing's rapid development period from 2000 to 2004. Most of Jinxing's branches in and outside the province were completed during this period. The second time was from 2004 to 2006. The launch of Weixue mid-box products represented by Weixue once again led to the transformation of Henan's overall product structure from 2 yuan to 3 yuan. Since 2006, provincial brands such as Venus, Oak, Yueshan, Luoyang Palace, and Blue Brand have successively launched their own 3-yuan products, and have regarded the upgrading strategy of 3-yuan products as one of the company's key development strategies in the next few years.

It should be said that the launch of Weixue mid-box created a new era of Henan 3-yuan products, allowing Henan beer to escape from the vicious circle of low-price competition for years. It also gave beer giants an opportunity to enter the Henan beer market. Reasons and opportunities. On the other hand, the rapid follow-up of other brands in the province on 3-yuan products has also made the competition for 3-yuan products quickly intensify.

With the profits and success brought by the promotion of mid-to-high-end products, Wei Xue established a 100,000-ton production plant in Gongyi, Zhengzhou in 2007 to realize its province-wide coverage strategy, and began to promote positioning 5 in the same year —Weixue pure draft beer for 6 yuan.

From a rational analysis, it is unwise for Wei Xue to build a factory in Zhengzhou. On the one hand, Wei Xue's success caused other competitors in the province to follow suit. Competition for 3-yuan products escalated sharply, and profitability began to decline rapidly. On the other hand, the Zhengzhou area is the strongest market for Venus and Aoke. Zhengzhou originally had four beer companies. In addition to Venus and Aoke, Maijia Beer has completely withdrawn from the Zhengzhou market and is operating poorly; the original Jianghai Beer has closed its doors. collapse. The total beer market capacity in Zhengzhou is about 300,000 tons, and the production capacity of Jinxing and Aoke alone in Zhengzhou has reached 550,000 tons. Weixue established a branch factory in an area with such fierce competition, so you can imagine the difficulty of market development. This is also true. Since the launch of the Wei Xue Zhengzhou factory, even the market share of Gongyi market, where the production plant is located, has not exceeded 20%. In addition, the overall rise of 3 yuan products in the Henan market has also attracted domestic beers such as Snowflake and Qingdao. The giants attach great importance to the Henan market. Since 2006, Snowflake has used its production plants in Lu'an, Fuyang, Huaibei and other Anhui provinces to make large-scale inroads into eastern and southern Henan. The Weixue Brewery Factory and the Gushi Factory, which are close to the Lu'an area, are entangled with the Jinxing Huangchuan Factory and are also under strong pressure from Snowflake.

The losses of the Gongyi factory and the pressure from Xuehua have greatly reduced Wei Xue's profitability, and Wei Xue's expansion in the provincial market has also been greatly hindered. In 2008, the market of Wei Xue in northern and western Henan shrank across the board. For the first time, the sales volume of Jinxing's 3-yuan products surpassed that of Wei Xue's products above 3 yuan. The honor of Wei Xue's No. 1 sales volume of mid- to high-end products in Henan has become history. In 2009, Wei Xue began to implement a strategic plan focusing on key regional markets, and Wei Xue's province-wide expansion plan came to an end.

Yueshan: The former Henan second child

Yueshan Beer, which started from the rural market like Jinxing, realized the transformation of the company's product structure in 2001 with the help of the promotion of Yueshan Bitter Melon Beer. The overall transformation has led to a bitter melon storm in the Henan market. Through the profitability brought about by the transformation of product structure, Yueshan has entered a period of rapid development and expansion. In 2000, Yueshan expanded the production capacity of the main plant from 120,000 tons to 220,000 tons; in 2002, Yueshan opened a new plant in Shanxi Province Zhongshi built a 100,000-ton Shanxi branch; in 2004, a 100,000-ton branch was built in Suiping County, Zhumadian; in 2005, the three production plants in Yueshan achieved a sales volume of approximately 340,000 tons, becoming a veritable name in the Henan beer market second brand.

In 2006, for the sake of overall strategic adjustment, Yueshan transferred the entire Shanxi branch to China Resources Snowflake for a price of 139 million yuan, focusing its main energy on operating the Henan market. At the same time, it established a new lion marketing company, with the help of The promotion of the new lion brand promotes the transformation of 3 yuan products. The upgrade of product structure is a problem faced by Yueshan that has not been effectively solved, which has also led to the decline of Yueshan's sales in the past two years. However, the market in northern Henan with Jiaozuo, Xinxiang, Anyang and Puyang as the core is still an important production area of ??Yueshan. In terms of sales, Yueshan is still the largest selling brand in northern Henan.

Oke: One mountain cannot accommodate two tigers

Oke beer, which is located in the same city of Zhengzhou as Venus, was the number one brand in the Zhengzhou market before 2000. After 2000, Venus relied on the successful promotion of Venus wheat beer to break through the strong barrier of Oak in Zhengzhou. After 2001, Venus's sales in Zhengzhou increased year by year, while Oak showed a downward trend year by year. By 2009, Venus had occupied over 55% of the Zhengzhou market share. The sales ratio between Venus and Oak in the Zhengzhou market had grown to 6:4. The Oak Zhengzhou plant only achieved about 80,000 tons in 2009. of sales.

For a long time, Oak's main sales have been concentrated in the Zhengzhou and Xuchang areas. Venus's strong performance in Zhengzhou and Xuchang has put increasing pressure on Oak's survival. Therefore, Oak has been trying the strategy of going global, and established the Wuyang branch factory in Luohe in 2004 and the Tangyin branch factory in Anyang in 2009.

However, judging from the current situation, the operating conditions of Aoke's two branches in the north and south are not ideal. In 2009, the two branches only achieved sales of about 40,000 tons per day. Oak's future development can only be described in four words: "dilemma."

Luoyang Palace, Blue Card, Aviation, Jiutouya, Bianjing: Stick to the homeland and wait for opportunities to break out

The remaining brands after the four major brands in Henan Province are Luoyang Palace The sales volume of local warlord brands represented by , Lanpai, Aviation, Jiutouya, Bianjing, etc. are all below 100,000 tons. Its unique feature is its strong ability to control the local market, especially in the prefecture-level cities where its production plants are located. Its market share is more than 70%. Strong brands in the province include Jinxing, Weixue, Yueshan, etc. The beer giants cannot touch its roots for the time being.

The main one that performs better among these brands is Luoyang Palace. Its overall market share in Luoyang is more than 85%, and it has achieved sales of nearly 100,000 tons. Among the overall products, products worth more than 3 yuan The sales volume ratio has reached more than 40%. Its sales volume is only about 100,000 tons, but its profitability is among the best in the provincial industry. Next are the three brands of Aviation, Blue Card and Jiutouya. While trying to maintain the local market, they also have certain external expansion capabilities.

Henan’s local brands: Amidst the turbulence, everyone has their own aspirations

As can be seen from the above, Henan’s local beer brands have become clearer in the national beer market competition environment. , living conditions are becoming increasingly difficult.

As the No. 1 brand in Henan, Venus’s key advantageous markets are mainly regional markets such as Zhengzhou, Xuchang, Luohe, and Nanyang; in most other markets, Venus has strong influence over Weixue, Yueshan, and Luoyang Palace. The local markets or key operating markets of strong regional brands such as , Aviation, Jiutouya, Bianjing, and Blue Brand are also helpless and have not done much. Similarly, under the pressure of fierce market competition, the strong brands in the above regions have to focus on intensive cultivation of local and key markets, and are often unable to expand in peripheral markets.

Although "unfortunate families are all different", whether it is Venus or these regional strong brands, they all have the same expectation: they hope that they can be acquired or become a shareholder of a beer giant as soon as possible. , or "sell it at a good price" through being acquired, or increase its value through equity participation and enhance its own competitiveness, etc. For example, Yueshan's Shanxi branch was transferred to Snowflake ahead of others, but after all, this was just a merger and acquisition outside Henan Province. In recent years, there have been frequent reports that brands such as Venus, Oak, Wei Xue, Yueshan, Blue Brand, and Yuequan were in contact and negotiating with certain beer giants, but in the end this did not become a reality due to various reasons. There is another indisputable fact: the current mergers, acquisitions and cooperation between local brands in Henan Province are estimated to not happen. With Jinxing’s current financial capabilities, it cannot acquire other local brands; while mergers and acquisitions between local brands in other regions and The possibility of cooperation is almost zero.

It can be said that many local brands in Henan have already prepared for mergers and acquisitions in the future. What is left now is who will be the first to stand up and fulfill this glorious example.

Snowflake, Qingdao: We have been working hard

For the Henan beer market with such consumption capacity and potential, in fact, first-line brands such as Snowflake and Qingdao have also been working tirelessly to improve the Henan beer market. With the market expansion work, especially in the past two years, Xuehua and Qingdao have significantly increased their efforts to develop the Henan market. For example, Snowflake has used the production capacity of its Anhui production plant to set up a Henan marketing company to focus on developing the markets in eastern Henan and southern Henan; Qingdao has used the radiation from its Shandong and Shaanxi factories to vigorously develop the markets in western and northern Henan. Moreover, their efforts have achieved good results. According to the data we have compiled so far, Snowflake is estimated to have achieved sales of about 60,000 tons in Henan Province in 2009. In some markets in eastern Henan and southern Henan, it has become the No. One brand; Qingdao plus brands such as Laoshan and Hans can achieve a sales volume of about 50,000 tons. In Sanmenxia, ??the Hans brand can basically tie with the local Jinxing brand. In Puyang City, after two years of operation, Laoshan has It has surpassed Jinxing to become the number one local brand. In Zhengzhou, the sales of Lao Qingdao and Qingdao Chunsheng have been rising steadily.

After the Snowflake Shanxi Yuncheng plant was put into operation in 2010, it will inevitably increase its efforts to develop the markets in western Henan and eastern Shaanxi; the construction of the Bozhou plant of Chongqing Beer also included the Henan market as its effective force scope.

It is foreseeable that in the next one to two years, domestic first-tier beer brands will enter the Henan market faster and with greater intensity, and the Henan market will also further accelerate the pace of capital and market integration.

Figure 3: Roadmap for major domestic first- and second-tier brands to attack the Henan market

Beer giants’ strategy for the rise of central China

In 2006, the Chinese government proposed a plan to target Henan Now three years have passed for the strategy for the rise of central China in the six provinces of Shanxi, Anhui, Hunan, Hubei and Jiangxi. We can happily see the gratifying achievements brought about by the strategy for the rise of central China. Similarly, we believe that domestic beer giants will also propose their own "strategy for the rise of central China."

In terms of market distribution, many companies generally regard Henan, Hubei, etc. as the central China market. Here, we will temporarily consider Henan, Anhui, Hubei and other three provinces as the scope of the beer giants to formulate their central strategy. It can be seen that among the current first-tier brands in the three central provinces, although brands such as Snowflake and Qingdao have been sold in Henan Province, they do not yet have production plants distributed, and Henan can be used as a blank area; in Anhui, Snowflake and Qingdao have their own The layout of production plants, but overall, Anhui is Snowflake’s advantage area, and Qingdao has little advantage here; in Hubei, Snowflake, Qingdao, Yanjing, and Yingbo all have production plants, but overall, Snowflake and InBev The advantages are more obvious. Therefore, comprehensively speaking, among the three central provinces, except for Henan, which is a blank spot, Snowflake has a relative advantage in the layout of Anhui and Hubei, while Qingdao and Yanjing have mediocre performance. So under such a pattern, whoever among the first-tier brands can gain priority in the Henan market will achieve better results in the strategic layout of the rise of central China.

Among the provinces adjacent to Henan, Shandong and Shaanxi are Qingdao’s most advantageous markets. These two provinces are close to the northern and western Henan markets. If Qingdao can incorporate these two regional markets into its own , it can connect Shandong and Shaanxi together and further strengthen its advantageous position. Anhui and Hubei are mainly Snowflake's advantageous markets. These two provinces are close to the markets in eastern Henan and southern Henan. If Snowflake can integrate the southeastern Henan market, it will be more conducive to consolidating its Anhui and Hubei markets. There are certain variables in the fact that the Shanxi market is an area where Snowflake is integrating. The launch of Snowflake's Yuncheng plant is obviously intended to covet the western Henan and Shaanxi markets. Western Henan will become a key combat area for Snowflake and Qingdao in the future. Hubei also has the layout of Qingdao, InBev and Yanjing, so the possibility of these three brands acquiring breweries in southern Henan cannot be ruled out. In the southern Hebei market, Qingdao's Laoshan brand has a relatively good advantage in this area. Qingdao has also been interested in building a factory in Shijiazhuang. Hebei is also a melee zone between Yanjing, Snowflake, InBev and Qingdao. Therefore, the competition in the southern Hebei market The results are not yet clear.

However, our conclusion is that no matter how these first-tier brands change in surrounding provinces, the Henan market will definitely become the key point for the beer giants to determine the success or failure of the strategy of rising central China.

An idea for the giants: strategies and suggestions for entering the Henan market

First, the obstacles to entering the Henan market.

We mainly consider two obstacles: First, the Henan beer market has always been plagued by low-price competition. We have explained this issue before. With the improvement of Henan’s overall economic level, Henan Beer’s The market has fully entered the stage of product structure improvement since 2006. At present, mid-to-high-end products priced at more than 3 yuan have accounted for more than 30% of the overall market capacity. The development prospects of the Henan beer market should be relatively optimistic. The second issue is the cooperation intention of local brands. As we have said before, it is not a problem at all.

Second, is it an acquisition or a self-built factory?

We have analyzed before that the total capacity of Henan beer market is about 2 million tons, and the current production capacity of local brands in the province has reached 3.2 million tons, which is already a serious overcapacity. If the first-tier brands choose Building a factory by yourself will only intensify the current competition in production capacity. Therefore, we believe that the acquisition strategy is better than the strategy of building a factory by yourself.

Third, who is more suitable to acquire?

We believe that the following 9 brands are currently worth acquiring in the Henan market: Venus, Wei Xue, Yueshan, Aoke, Luoyang Palace, Aviation, Blue Card, Jiutouya, and Bian Beijing. Other breweries with too small production capacity, small brand influence, too small market share or seriously backward production equipment have little value in being acquired.

From the perspective of the needs of first-tier brands, Qingdao is considering the connection strategy between Shandong and Shaanxi markets. It is more appropriate to acquire Yueshan and Aviation in northern Henan, and Luoyang Palace in western Henan; Xuehua considers For the continuous brand strategy in the Anhui and Hubei markets, it is more suitable to acquire Weixue, Lanpai and Yueshan Zhumadian branches located in southeastern Henan (Yueshan Zhumadian Branch does not rule out the possibility of transferring this factory separately due to the fierce competition in the market environment. ); Luoyang Palace may become the focus of acquisitions by Qingdao and Snowflake; Yanjing and InBev are currently not very likely to acquire breweries in Henan.

Among these brands, the acquisitions of Venus and Oak are questionable.

Let’s talk about Oak first. Oak’s main markets are in Zhengzhou and Xuchang, and these two areas are precisely where Venus is most successful. After Jinxing's strategic adjustment in the past two or three years by shrinking the eastern market and focusing on the Henan and western markets, it has obviously increased its efforts to intensively cultivate the advantageous regional markets in the province. This has given Aoke, which was already in a state of decline, greater pressure. Aoke's current market share in Zhengzhou and Xuchang has dropped to less than 30%. The main plant only completed sales of about 80,000 tons in 2009; the scale and operation of the two branch plants are very unsatisfactory, and the branch plant has been The value of the acquisition is not great (the Tangyin plant is just a filling plant), and the value of the acquisition of a main plant that is experiencing a significant decline is worthy of consideration.

Let’s talk about Venus. Venus currently has 16 production plants in China. Venus’ eastern plant is not operating well. Furthermore, the market scope of the eastern plant is very similar to that of these first-tier brands, so it has not been much popular. Acquisition value: The areas where Venus has advantages are mainly in Henan Province and western markets such as Yunnan and Guizhou. For these factories, Venus will definitely not sell individual plants individually, but transfer them as a whole. However, an overall acquisition will require a lot of funds (estimated to be at least More than RMB 2 billion), are first-tier brands willing to allocate so much money to acquire Venus? There are also issues with the property rights and system of Venus. The property rights reform of Venus has not yet achieved clear results. This was one of the important reasons why the cooperation between Budweiser and Venus did not succeed at that time.

Table 2: Analysis of M&A factors of major breweries in Henan Province

Brand acquisition value, difficulty in M&A, M&A issues and main obstacles

Jinxingda★★★★★ Price and system issues

Weixue is a big ★★★★ price problem

Yueshan is a big ★★★ problem of separate acquisition of the main factory and branch factories

Aoke General★★★ The issue of the value of the branch factory being acquired

Luoyang Palace/Aviation Group★★★ Is Asia Group willing to give up its controlling stake in the two companies

Blue Brand★ ★ Price issue

Jiutouya is average★★ Is Jiutouya Group willing to give up the beer business

Bianjing is average★★ Production equipment is backward and management is too chaotic

Henan market, who can be the first to sound the charge?

Not long before this article was written, there had been news that Blue Brand was in contact and negotiating with Snowflake, Qingdao and others. From an objective point of view, the Henan beer market is on the eve of a major integration. The integration of the Henan beer market will inevitably bring many stories and excitement to the Chinese beer industry. It depends on who among the first-tier brands can be the first to make the impact. A clarion call to the Henan market.

Let’s wait and see!

November 22, 2009