Summary of Key Issues
In 2025, Chongqing Beer appeared to have recovered its performance (with slight increases in sales and revenue, and a 10% rise in net profit), but it is actually deeply trapped in a growth dilemma: revenue has been almost stagnant for three years, non-recurring net profit has declined for two consecutive years, and the main business suffered losses in the fourth quarter. High marketing expenses have been ineffective, with the central region (the company's "home base," accounting for 40% of revenue) experiencing continuous decline. The root causes include the peak in its premium product strategy, a gap in mid-to-low-end products, dependence on instant-drink scenarios for sales channels, and being overtaken by Yanjing Beer. Although there are adjustments to channel and product strategies for 2026, whether these will lead to a turnaround remains uncertain.
The Illusory "Recovery" on Paper
Looking at the annual report, Chongqing Beer's sales increased by 0.68%, revenue by 0.53%, and net profit by 10.43% in 2025, suggesting it has emerged from the trough of 2024. However, upon closer inspection:
- Revenue Stagnation for Three Years: Revenue has hovered around 14.7 billion yuan from 2023 to 2025, with a compound growth rate of nearly zero. In contrast, companies like China Resources and Tsingtao have seen steady growth through premium product development and regional expansion, leaving Chongqing Beer far behind.
- Declining Non-Recurring Net Profit: The increase in net profit was due to resolving legal disputes with Chongqing Jiawei (cancellation of previously recognized liabilities, resulting in an additional profit of about 19 million yuan). Excluding these one-time gains, non-recurring net profit decreased by 2.78% in 2025 compared to 2024, indicating a weakening ability to generate profits from its main business.
- Unusual Loss in the Fourth Quarter: Although revenue increased by 5% in the fourth quarter, net profit fell by 10 million yuan, and non-recurring net profit after deductions was negative by 34 million yuan—this indicates direct losses from the main business, highlighting the weakness of growth even during the peak sales season.
- Overtaken by Yanjing: Chongqing Beer was once fourth in the industry but was surpassed by Yanjing in 2024 and has not been able to regain its leading position.
Dual Declines in Volume and Price + Product Gap
Chongqing Beer's core problem is that it cannot sell either enough products or at a high price, indicating significant issues with its product mix:
- Pressure on Both Volume and Price: Sales only increased by 0.68% in 2025, with the average price per ton of beer rising by just 0.2%, making it impossible to increase revenue through price hikes.
- Premium Product Growth Cannot Offset Weakness in Mid-to-Low End: While premium product sales grew by 3.23%, mainstream and economy-priced products saw declines of 1.03% and 1.8% respectively. The small increase in premium sales is not enough to compensate for the decline in mid-to-low-end sales.
- Lack of Strong Products: Previously, Chongqing Beer relied on Wusu beer for its premium segment, but now Wusu's growth has stagnated, and there are no new strong products to fill the gap, creating a breakdown in its product lineup.
Increasing Marketing Expenses with Poor Results
To boost growth, Chongqing Beer has invested heavily in marketing, but the returns have been poor:
- Rising Marketing Expenses: Expenses soared to 2.655 billion yuan in 2025, a 5.66% increase from 2024. Since the merger with Carlsberg in 2020, marketing costs have risen from 1.984 billion yuan to 2.655 billion yuan, a 34% increase over five years.
- High Investment with Low Returns: Expenses include sponsoring the La Liga, the variety show "Run!," and hiring Chen Xiaochun as a spokesperson, as well as naming concerts. These efforts only resulted in a 0.68% increase in sales and 0.53% in revenue, meaning more money was spent with little gain, leading to a cycle of increasing losses.
Loss of the Central Region (Home Base)
The central region (the southwest area centered around Chongqing) is crucial for Chongqing Beer, accounting for about 40% of its revenue. However, this region has seen declines in both volume and price for two consecutive years, making it the only area showing negative growth among the three major regions:
- Internal and External Challenges: Internal issues such as resource-consuming packaging disputes and aging local brands, along with insufficient penetration of premium products; external threats from giants like China Resources and Tsingtao competing for the southwest market, weak consumption in restaurants and bars, and an overall poor economic environment.
- Unstable Foundation = High Risk: If Chongqing Beer loses this key market, its growth in other regions will be unsustainable, essentially undermining its foundation.
Can 2026 Strategies Lead to a Turnaround?
Chongqing Beer has outlined three main strategies for 2026, but it is still uncertain whether they can address the core problems:
- Focusing on Non-Instant-Drink Channels: The company plans to strengthen traditional (supermarkets, convenience stores) and emerging (food delivery, e-commerce) channels to compensate for its reliance on instant-drink scenarios. Whether this will help quickly gain market share depends on execution.
- Introducing 1L Premium Products: Chongqing Beer aims to further expand its premium product range with larger packaging, but whether the new packaging will be successful is unknown.
- Expanding into Non-Alcoholic Beverages and Craft Beers: The company hopes to find growth in these areas, but the craft beer market is highly competitive, and non-alcoholic beverages are not a core business, so it's uncertain whether they can become a new source of revenue.
In summary, Chongqing Beer's challenges lie in unaddressed old problems and unproven new strategies. Whether it can truly break out of its growth slump in 2026 will take time to determine.