Economy

Markets

Industries

Insights

Reports

Events

Tsingtao confident on strong sales

By Ding Qingfen (China Daily)
Updated: 2009-04-10 07:49

Riding high on the strength of its brand, Tsingtao Brewery Co said it expects to maintain strong sales growth this year also, despite high raw material prices and intense competition.

The Shandong-based brewer was one of the few beer manufacturers that was able to withstand the double whammy of mounting costs and shrinking domsalesestic demand last year.

Tsingtao said its 2008 profit rose 25.34 percent from a year before to 699 million yuan, on sales of 16 billion yuan, up 16.88 percent.

The company said it remains confident for 2009 and said its growth would be 2 percentage points higher than that of the national beer market.

Related readings:  Tsingtao H2 net up 18%, targets higher sales in '09  Tsingtao snaps up brewery  Tsingtao Brewery H1 profit up 32%  China, US beer giants brew up alliance

Although smaller in size to the beer conglomerate controlled by China Resources, Tsingtao owns one of the best-known brands, synonymous with quality brews, not only in its home province but around the nation.

In 2008, the company sold 5.38 million kiloliters of various brews, up 6.6 percent from 2007. The growth rate was 1.2 percentage points higher than the industry average.

More importantly, Tsingtao succeeded in expanding its market share to 13.24 percent in 2008 from 12.86 percent in 2007 at the expense of its competitors when overall demand was shrinking..

China's beer sales declined last year, as the financial crisis, snowstorm and earthquake hurt demand. The output volume nationwide was 41.03 million kiloliters, up by 5.4 percent year-on-year, the lowest growth rate in the past three years.

Like most other brewers, Tsingtao also had to grapple with the problem of escalating costs. The company said its operating costs rose by 18.8 percent in 2008 to 9.5 billion yuan.

The company said that it was able to maintain its profitability by raising the prices of its products, better management and production efficiency.

The company hiked beer prices by 10 percent in mid-2008. It also carried out a performance-oriented motivation policy, based on which the executives were rewarded for their contributions.

The company's strategy is now clear and focused, said analysts. The major four brands under Tsingtao contributed to 94 percent of its sales in 2008, 18 percentage points higher than 2007.

After several rounds of mergers and acquisitions, Tsingtao now has 53 breweries nationwide with an annual; output capability of 7.7 million kiloliters annually, next to that of China Resources Snow. "This year, we will keep growing our capacity," said the company.