The rise of local beer brands in the premium segment coincides with BUD APAC seeking transformation amid a slowdown. On May 5, BUD APAC (1876.HK) released its first-quarter 2026 financial results. The group reported revenue of $1.493 billion, a decrease of 0.7% year-on-year. Net profit attributable to equity holders was $226 million, down 3.4% compared to the same period last year.
The performance decline at BUD APAC is closely tied to its largest single market, China. Competition in the Chinese beer market is intense. With the rise of local brands like China Resources Beer and Tsingtao Brewery, alongside continuously shifting consumer trends, BUD APAC's absolute dominance in the premium market has been diluted.
According to Euromonitor data, BUD APAC's market share in China's premium beer segment fell from 49.1% in 2015 to around 40% in 2025. In the first half of last year, BUD APAC's revenue was even briefly surpassed by China Resources Beer, losing the top industry position temporarily.
To reverse the downturn in the Chinese market, BUD APAC appointed Cheng Yanjun as its CEO in April last year, its first Chinese CEO in recent years. A series of reform measures were launched focusing on branding, distribution channels, and products.
Historically, BUD APAC had a strong focus on the nightlife and restaurant channels, missing the window for transformation towards new retail. In response, the company has clearly stated it will accelerate the premiumization of its off-trade channels while driving scene innovation in on-trade channels. It is also gradually streamlining redundant product lines to concentrate on its two flagship brands, Budweiser and Harbin Beer. On the product front, it launched "Harbin 1900" to fill the gap in the 8-10 RMB price segment.
One year after the new Chinese CEO took office, what is the result of these reforms? The financial report shows that in the first quarter of this year, revenue for BUD APAC's China region was still declining, down 4% year-on-year. This performance was weaker than the group's overall results. Although the decline has narrowed compared to the full-year 2025 decrease of 8.6%, the market still exhibits a trend of declining both in volume and price.
A closer look at the data reveals a strategy of sacrificing price for volume. Beer sales volume in China decreased by 1.5%, while revenue per hectoliter declined by 2.5% during the period. The company indicated this was primarily due to increased support for distributors and emerging sales channels.
Analysis from Puyin International pointed out that company management has set volume growth as a primary goal for this year. However, the market is concerned that BUD APAC might increase promotional activities to achieve this, potentially leading to continued pressure on average selling prices and profit margins.
In stark contrast to BUD APAC, local beer brands have generally achieved growth in both volume and price. Several local brewers, including Huiquan Beer, Yanjing Beer, and Zhujiang Beer, reported increases in both revenue and net profit for the first quarter, signaling a gradual warming trend for the entire beer industry.
Currently, BUD APAC's China operations are still striving to halt the decline. Recapturing lost ground and returning to a growth trajectory will likely require more time. Following the earnings release, several institutions slightly lowered their profit forecasts for BUD APAC this year. Citigroup reduced its buy target price from HK$11.4 to HK$10.9.
Comments