September 5, 2024. Shanghai - In an era of fast-changing consumer landscapes, the loss of the demographic dividend of young consumers and aging populations are exerting great influence on the consumer goods, said Hou Xiaohai, Chairman of the Board of China Resources Beer (Holdings) Company Limited (“China Resources Beer”) at a CEIBS Executive Forum on Shanghai campus today.

Focusing on the topic “Thriving in the Age of New Consumer Trends: Winning Strategies for Businesses”, Mr. Hou presented how China Resources Beer, the renowned company behind Snow Beer, one of the world’s best-selling beer brands, has successfully navigated market changes to stay ahead of their competition and sustain growth in a dynamic and competitive marketplace.

“We’re now in a new world, in which consumption is undergoing profound changes,” Mr. Hou said, highlighting that key consumer groups today are shifting towards new consumption patterns that contrast sharply with traditional models.

“As younger generations gradually become the main driver of consumption, their consumption needs, scenarios, and ways of spending are vastly different from the traditional ones we are familiar with,” said Mr. Hou, adding that amidst a rapidly aging population, elders have different drinking frequency and capacity than younger generation.

To thrive in this new era, Mr. Hou then identified seven key elements for building a sustainable and thriving business model, namely Prioritising Consumer Insight (understanding new consumer groups, their needs, and new consumption scenarios); Product Innovation (developing innovative products, expanding categories, and exploring new venues); Developing New Models (adapting sales, channel, terminal operation, and consumer operation models to the evolving landscape); Low-cost Expansion of emerging markets while consolidating established ones; Building a Firewall (protecting core markets and subdivisions through large-scale product offerings); Adapting to New Consumption Trends (planning future growth curves and development strategies in line with consumer shifts); and Strong Risk Control (managing operational risks, including asset capacity, cash flow, procurement, and administrative costs).

As a company which has transformed from focusing solely on a traditional approach to becoming a leading brewery competing with international rivals, China Resources Beer places growth as the cornerstone of the company’s strategy.

“The beer industry is not solely about reducing costs, but rather about embracing growth as the key success factor. In the old days, we competed on the cost of each bottle, but now consumers place higher demand on the quality of raw material and ingredients, which requires us to explore new business models in response to the current consumption trends,” Mr. Hou went on.

In addressing the strategic roadmap of China Resources Beer, Mr. Hou emphasised the need to adopt a "new world mindset" with a focus on embracing new consumer groups, such as the middle classes, rural populations and female customers, while expanding into new categories including fruit beer, soda beer, and baijiu (white Chinese liquor) to diversify the company’s drinks portfolio.

“China Resources Beer has remained committed to offering premium products to our customers. With upgrades in consumption, what is valued may not be higher prices, but better quality and personalised value and packaging of products,” Mr. Hou explained.

In 2018, China Resources Beer partnered with Dutch brewing company Heineken Group to tap into the premium beer market.

In identifying new growth strategies, Mr. Hou further pointed out that the company has managed to develop innovative products such as those made from Chinese wheat and highland barley. “The rise of Chinese brands is not only a symbol of China as a great power, but also an inevitable result of the growth of China’s new generation of consumers.”

In addition to its traditional brewery business, China’s leading brewer has also tapped into the baijiu market to capitalise on rising demand for China’s national spirit and built a dual empowerment model for beer and baijiu.

“Although spirits and beer are significantly different, the most important thing is that they’re complementary in terms of consumption methods, consumer experience, value and context, business models, and profitability. This is quite important," he concluded, adding that the diversification of alcoholic beverages is crucial for the beer industry as it transitions from scale to quality, as well as future development.