The recovery of China's beer market hasn't met BUD APAC's expectations.
On July 30, BUD APAC released its interim results for the six months ending June 30, 2026. The company posted first-half revenue of $3.171 billion, a 1.4% decline year-on-year on an organic basis; total sales volume fell 2.2% to 4,262,400 kiloliters; adjusted EBITDA dropped 8.9% to $926 million, with margins narrowing 236 basis points to 29.2%.
Operating pressure intensified in the second quarter, with revenue down 2.1% year-on-year to $1.678 billion, sales volume down 4.1%, and EBITDA margin down 229 basis points year-on-year to 27.6%.
The drag came primarily from the Chinese market.
In the second quarter, China's sales volume fell 9.7% year-on-year, revenue dropped 8.6%, and adjusted EBITDA declined 15.9%, all underperforming the group average.
The company stated that China's beer industry has been impacted by adverse weather and a persistently sluggish on-premise channel, with BUD APAC's performance lagging behind the industry. On-premise channels typically include consumption scenarios like restaurants, bars, and nightclubs, and are key sales channels for premium beer. BUD APAC has long focused on premium and super-premium products as its growth priority in China, so the slower recovery in dining and nighttime consumption has had a more direct impact on its sales volume, product mix, and profits.
Sales volume declines also led to operational deleverage. Fixed production, sales, and channel costs must be borne by fewer sales, causing profit declines to outpace revenue. Meanwhile, BUD APAC continues to ramp up market spending. In the first half, the company's sales and marketing expenses rose from $524 million in the same period last year to $584 million, while other operating income fell from $40 million to $28 million.
In China, BUD APAC is accelerating the nationwide rollout of Budweiser Black Gold and expanding the sales range of Corona fully open-top canned products, aiming to cover more off-premise scenarios like home consumption and instant retail. The unit price, consumption scenarios, and channel profit structure of new channels differ from on-premise channels like bars and restaurants. The current challenge for BUD APAC is not just moving products from offline dining to retail and instant retail channels, but also maintaining premiumization and profitability during the channel shift.
The weakness in China was partially offset by Korea and India.
In the second quarter, the Asia Pacific East market saw sales volume grow 10.1%, revenue up 8.5%, and normalized EBITDA up 26.3%. Korea recorded low double-digit sales volume growth, with market share continuing to improve, though growth was partly influenced by a low base. The India market continued its rapid growth, with both revenue and sales volume achieving double-digit increases, driven by industry expansion and premium products.
However, due to China's larger share, growth in Korea and India was insufficient to offset overall pressure. The company's next phase still depends on a recovery in the China market, with the restoration of the on-premise channel and growth in O2O and off-premise channels potentially supporting premiumization and profit improvement.
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