A fierce competition for consumer attention is about to begin.
Since transitioning to a shareholding system in June 1993, Tsingtao Brewery Company Limited (600600.SH) has been selling beer for 32 years. This year, Tsingtao Brewery is considering expanding into the yellow wine market. Unexpectedly, during the execution of the acquisition plan, the equity of Shandong Jimo Yellow Wine Factory Co., Ltd. (referred to as “Jimo Yellow Wine”) was frozen again on October 10. According to Tianyancha, this company has faced multiple equity freezes since September this year.
This sudden news adds a new variable to Tsingtao Brewery's acquisition of Jimo Yellow Wine. Months ago, Tsingtao Brewery announced the acquisition, but there have been no further updates explaining whether the acquisition plans will proceed after this unforeseen complication. A representative from the board secretary's office of Tsingtao Brewery stated to investors, "It’s not convenient to say anything right now; just wait for our announcement.”
If Tsingtao Brewery successfully acquires Jimo Yellow Wine, what does this mean for both parties? Cai Xuefei, an expert at the China Wine Culture Brand Research Institute, believes that this move could leverage the complementary effects of their seasonal sales (with beer peaking in summer and yellow wine in winter) to enhance annual capacity utilization and performance stability. Additionally, Tsingtao Brewery's expansive sales network could help the regionally-focused Jimo Yellow Wine penetrate the market and create new growth opportunities.
As of the close of trading on October 21, Tsingtao Brewery's share price stood at 67.18 yuan per share, down 0.78%, with a total market capitalization of 91.647 billion yuan.
Equity Freeze Becomes Major Challenge for Acquisition Jimo Yellow Wine's official website states that the production of vintage wine in the Jimo area flourished during the Spring and Autumn and Warring States periods. By the Guangxu period of the Qing Dynasty, Jimo boasted several famous old wine houses, such as "Longsheng Zhan." In the eighth year of the Republic of China, there were over 500 old wine workshops, a tradition that continued until just before liberation. Should Tsingtao Brewery indeed acquire Jimo Yellow Wine, this historic backdrop could enhance its branding narrative.
After liberation, the Jimo County government established the "Jimo County Yellow Wine Factory," which was renamed Shandong Jimo Yellow Wine Factory in July 1988 and was given its current name in September 2010. To differentiate its locally produced yellow wine from those made elsewhere, Jimo Yellow Wine refers to its product as "Jimo Old Wine," a name that also serves as its registered trademark.
Since its founding, Jimo Yellow Wine has experienced several significant developments, including the establishment of the second yellow wine factory in Jimo in 1985, which was later acquired in 2010. The yellow wine has also been recognized as a time-honored Chinese brand by the Ministry of Commerce in 2006.
Why has this prestigious "north sect of yellow wine" suddenly faced an equity freeze? According to Tianyancha, Jimo Yellow Wine has two major shareholders: Shandong Lujin Import and Export Group Co., Ltd. (holding approximately 54.55%) and Xinhua Jin Group Co., Ltd. (holding about 45.46%). Xinhua Jin Group holds 95% of Shandong Lujin, with 5% owned by Shandong Haichuan Group Holding Co., Ltd. The issue arose when Xinhua Jin Group became embroiled in civil litigation and was designated as an executing party.
The first instance of this civil litigation involves two equity freeze notices: 1. Xinhua Jin Group is the executing party, and equity from Jimo Yellow Wine is frozen, amounting to approximately 15.75 million yuan; 2. Xinhua Jin Group is the executing party for Shandong Lujin, with equity also frozen in the same amount. The freeze lasts from October 10, 2025, to October 16, 2028.
In fact, since September this year, Jimo Yellow Wine has faced multiple instances of frozen equity. An article published by the Qingdao Regulatory Bureau of the China Securities Regulatory Commission on August 26 indicated that the controlling person of the National Xinhua Jin International Co., Ltd. had, inappropriately utilized company funds amounting to 406 million yuan.
Under pressure, Xinhua Jin was suspended on September 29, and its A-shares were renamed "ST Xinhua Jin." On October 11, ST Xinhua Jin stated that without rectifying the situation within six months as the regulatory authority required, the company's stock would face delisting risk.
On October 18, ST Xinhua Jin reiterated its commitment to recover the misappropriated funds as soon as possible and urged Xinhua Jin Group to liquidate and manage its assets to raise funds quickly.
ST Xinhua Jin has reported dismal performance in recent years. Its 2024 net profit attributable to shareholders was about -134 million yuan, a year-on-year decrease of 354.59%, while excluding non-recurring gains and losses, the net loss was about -141 million yuan, a decrease of 424.48%. For the first half of 2025, the net profit attributable to shareholders was 12.87 million yuan, down 39.45% year-on-year.
When Tsingtao Brewery announced its acquisition on May 7, it mentioned that if the prerequisites for the transfer agreement were not met or waived within 120 days after signing, the agreement would be voided. As of October 21, 167 days had passed, far exceeding the initial 120-day stipulation.
Interestingly, on October 21, ST Xinhua Jin disclosed that from October 15 to October 17, its closing price increased by over 12%. By the end of October 21, ST Xinhua Jin closed at 5.43 yuan per share, up 2.65%, with a total market capitalization of 2.328 billion yuan.
Independently, wine industry commentator Xiao Zhuqing remarked that the sudden equity freeze presents the "biggest obstacle" to the transaction, noting that Tsingtao Brewery has yet to pay the transaction price, and the acquisition agreement had surpassed the original 120-day effective period. If the equity freeze is not lifted before the deadline for Xinhua Jin to maintain its listing, the acquisition may inevitably fall through. Cai Xuefei further concurred that this equity freeze is a significant hindrance, effectively putting the acquisition on hold.
Aiming to Broaden Market Reach On May 7, 2025, Tsingtao Brewery announced it had signed an equity transfer agreement to acquire 100% of Jimo Yellow Wine. The deal is valued at 665 million yuan and, upon completion, Jimo Yellow Wine will become a wholly-owned subsidiary of Tsingtao Brewery.
In 2024, Jimo Yellow Wine's revenue was approximately 166 million yuan, up 13.5%, with a net profit of 30.47 million yuan, a rise of 38%. As of December 31, 2024, its total assets were about 908 million yuan, with net assets of around 203 million yuan.
With the equity freeze, the question arises: is the 665 million yuan transaction price justifiable? A spokesperson from Tsingtao Brewery insists, “The price is recognized as fair, having been mutually agreed upon after negotiations. Jimo Yellow Wine’s issues stem from its shareholders, not the business itself.”
Regarding the 665 million yuan acquisition cost, Tsingtao Brewery emphasized that the price reflects the valuation of the target company and its subsidiaries' net assets, taking industry comparable transactions and leading public company P/E ratios into account alongside future industry prospects, asserting it aligns with market pricing levels and general commercial principles. Additionally, Tsingtao Brewery pointed out that choosing Jimo Yellow Wine primarily aims to broaden its market reach.
Xiao Zhuqing noted that if this acquisition stalls, Tsingtao Brewery may still seek other yellow wine targets. Given the regional concentration and low degree of consolidation in the yellow wine industry, ample room exists for acquisitions. If Tsingtao Brewery aims to diversify and achieve seasonal complementarity, it will not stop after a single failure but will proceed with a more cautious evaluation of asset quality and compliance risks.
Cai Xuefei believes that while diversifying to cope with growth pressure in Tsingtao Brewery's core beer business is a long-term strategy, the current suspension of the Jimo Yellow Wine acquisition due to the equity freeze, compounded by market movements from competitors like China Resources Beer which has partnered with Guyue Longshan to explore "yellow wine + beer," may prompt Tsingtao Brewery to temporarily halt direct acquisitions in the yellow wine sector and reassess its diversification strategy's path and timing.
Upon announcing the acquisition of Jimo Yellow Wine, Tsingtao Brewery highlighted its efforts to expand beyond beer and promote diversification, which could bring new opportunities for growth. With the inclusion of Jimo Yellow Wine, the company could enhance its product portfolio and expand market channels, creating a complementary effect between the sales patterns of "Jimo Old Wine" and its beer portfolio. Tsingtao Brewery has high hopes for this acquisition, intending it to "promote high-quality development" for the company. However, the acquisition is proving to be less straightforward. As of August 27, 2025, Tsingtao Brewery's half-year report indicated that the transaction had yet to be concluded.
Entering a Saturated Market Tsingtao Brewery has seen continuous revenue and net profit growth for three consecutive years (2021, 2022, and 2023), but in 2024, this trend broke, with a 5.3% year-on-year revenue decrease and a slight net profit increase of only 1.81%. Specifically, in the fourth quarter (October-December 2024), there was a net loss of approximately 645 million yuan. In contrast to a profitable net profit exceeding 2 billion yuan in Q2 (April-June), such a winter loss underscores the pressing need for Tsingtao Brewery to seek new growth points.
In the first half of 2025, Tsingtao Brewery again achieved double growth, though at a limited rate. For the first half, revenue was around 20.491 billion yuan, up 2.11%, with a net profit attributable to shareholders of about 5.263 billion yuan, up 7.21%. At the end of the reporting period, Tsingtao Brewery owned 57 wholly-owned and controlling beer production facilities, alongside two joint partnerships, distributed across 20 provinces, municipalities, and autonomous regions in China.
In its 2024 annual report, Tsingtao Brewery mentioned a sluggish recovery in domestic beer consumption, with enterprises above the designated size collectively achieving a beer production volume of 35.213 million kiloliters for the year, a decline of 0.6% year-on-year. The 2025 interim report revealed that, despite the complex and ever-changing market environment, the same category of enterprises reported a 1.904 million kiloliter production volume, down 0.3%. Tsingtao Brewery believes that the beer market in mainland China has essentially reached a saturation point, transitioning into a "stock competition" phase, with numerous consumer choices available, including beer, yellow wine, white wine, and beverages.
Xiao Zhuqing remarked on Tsingtao Brewery's stagnating revenue growth in recent years, with a 5.3% dip in 2024 revenue and a noticeable slowdown in net profit growth. As competition in the beer industry saturates and seasonal demand weakens, acquiring a yellow wine project, which is popular in the winter, could create a seasonal sales complementarity, heralding an essential direction for tapping into new growth trajectories.
Currently, Tsingtao Brewery is implementing a brand strategy that encompasses the “Tsingtao Brewery main brand + Laoshan Beer as a nationwide secondary brand.” Moreover, they are expediting the cultivation of major single products alongside innovative categories, advancing the development of their product mix under the "1+1+1+2N" strategy, wherein classic, Tsingtao White Beer, high-end fresh 1L aluminum bottles, and ultra-premium products all demonstrate steady growth. Statistically, Tsingtao Brewery's flagship product sales for the first half stood at 2.713 million kiloliters, representing a 3.9% increase year-on-year, while the sales of mid- to high-end products reached 1.992 million kiloliters, up 5.1%.
Notably, the research and development expenditures for Tsingtao Brewery in the first half of 2025 amounted to about 43.712 million yuan, an increase of 48.65%, primarily directed towards new product endeavors. For the first half, investment in capital construction projects collectively reached approximately 949 million yuan. Tsingtao Brewery emphasized that it possesses ample self-owned funds and continuous positive net cash flows to meet its capital project funding requirements. However, the net cash flow from operating activities in the first half dropped to about 4.8 billion yuan, a year-on-year decrease of 16%.
Cai Xuefei posits that Tsingtao Brewery plans to leverage its dealer network of 11,600 distributors covering 90% of county markets to enable Jimo Yellow Wine to break regional restrictions and use trendy marketing approaches to develop sparkling yellow wine and low-alcohol products, effectively penetrating youthful venues such as barbecues and music festivals. This not only addresses the aging consumer crisis of yellow wine but also fulfills the diverse alcohol consumption demands of consumers, while opening up new growth avenues in an otherwise saturated beer market.
While Tsingtao Brewery's capabilities are beyond question, the resolution of Jimo Yellow Wine's equity freeze remains uncertain. Nevertheless, market competition is relentless, and the adage "one trick pony" no longer fits today's saturated playing field; alliances and diversified operations are now the trend.
Recent reports indicated that on October 15, Guyue Longshan (600059.SH) and China Resources Beer (00291.HK) signed a strategic cooperation agreement in Beijing, planning to develop "yellow wine + beer" crossover products together. This move underscores Guyue Longshan's imperative to respond to performance pressures and intensifying market competition with youthful and upscale strategies.
Why has yellow wine become a coveted market for these two beer giants? Can their collaboration indeed yield synergistic results? Cai Xuefei analyzes that, despite the yellow wine sector's evident recovery and innovative vitality, leading enterprises are striving to break geographic constraints while also benefiting from favorable policies. However, potential synergistic benefits with beer companies will hinge on inputs regarding channel empowerment, cultural value reconstruction, and product innovation, as well as the overall development of the yellow wine category.
From a positive perspective, the entry of beer behemoths could breathe new life into the existing market. With Tsingtao Brewery and China Resources Beer stepping in, a reshaping of yellow wine's brand image and channel systems is anticipated while expanding the consumer base and transitioning yellow wine from a "local accompaniment" to a "national trendy drink."
Nonetheless, the business world knows no boundaries, and each day presents fresh and exciting narratives for the market. Additionally, reports have surfaced that on October 1, Mixue Group (2097.HK) announced it had acquired a 53% stake in Fulujia (Zhengzhou) Enterprise Management Co., Ltd. for approximately 298 million yuan on September 30. Following this transaction, Fulujia becomes a non-wholly-owned subsidiary of Mixue Group, notable due to the real control being held by the spouse of Mixue's CEO, Zhang Hongfu.
As vendors of lemon water look to diversify into beer, a struggle for consumer acquisition is on the horizon. Would you prefer a cup of lemon-flavored yellow wine or a bottle of yellow wine-flavored beer? Feel free to share your thoughts in the comments section.
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