Summary of Key Points
Henan's established beer company, Jinxing Beer, has experienced a surge in performance thanks to the launch of its "Jinxing Maojian" tea-based beer in 2024 (with revenue increasing by 191% and net profit increasing by 10 times in the first three quarters of 2025). It is attempting to go public for the third time, but the prospect was halted when the prospectus submitted to the Hong Kong Stock Exchange expired due to a lack of timely progress in the review process. Meanwhile, AB InBev China has sued Jinxing Beer on charges of trademark infringement and unfair competition. There are concerns in the market that Jinxing Beer is overly reliant on this successful product, its traditional product line is declining, there are disputes regarding its internal governance (such as different share prices for the same class of shares), and it faces competition from industry giants, raising doubts about the sustainability of its growth.
Detailed Analysis
1. Three Attempts at Going Public: Why Has Jinxing Failed to Take the Final Step?
Jinxing Beer has had a dream of going public for over 20 years within its 44-year history:
- First attempt (2003): The company aimed to go public through a foreign partnership, but it failed due to unclear property rights.
- Second attempt (2011): After completing restructuring, it announced plans to go public within 3-5 years, but this did not succeed.
- Third attempt (2026): It submitted its application to the Hong Kong Stock Exchange with the help of its tea-based beer product, but the process was halted because the review hearing did not take place within six months.
The key reason for these setbacks is that the China Securities Regulatory Commission (CSRC) requested additional clarification on issues such as different share prices for the same class of shares and dividend distribution. For example, the company's owners, Zhang Tieshan and his son, purchased shares at 1 yuan each, while employees bought them for 6 yuan each, and distributors paid 18 yuan each (a 18-fold difference in price). Additionally, three dividends totaling 329 million yuan were distributed within three months before the application was submitted, with most of this money going to the Zhang family. These actions have raised suspicions of fund-raising practices and slowed down the company's listing process.
2. Is Tea-Based Beer a Lifesaver or a Double-Edged Sword?
Tea-based beer has indeed been a lifeline for Jinxing. The "Jinxing Maojian" product was a huge success, selling 100 million cans in just 10 months, and in the first three quarters of 2025, Chinese-style premium beers accounted for 78.1% of total revenue, propelling the company from a mediocre performance to rapid growth. However, there are also significant challenges:
- Decline in Traditional Products: The revenue share of Jinxing's traditional products (such as the 1982 original yeast and pure draft beers) has dropped from 79.2% to 19.6%, putting all its bets on a single product.
- Criticism from Experts: Industry experts, such as Xiao Zhuqing, have criticized this strategy as "gambling-like," arguing that without a solid foundation in traditional products, the company will lack a buffer if the popularity of tea-based beer fades.
3. AB InBev's Lawsuit: Copycatting or Fair Competition?
AB InBev's lawsuit is straightforward, accusing Jinxing of trademark infringement and unfair competition due to the similarity between Jinxing's tea-based beer packaging and design and a product from AB InBev. This lawsuit reflects the industry giants' efforts to dominate the Chinese-style premium beer market:
- Leading companies like AB InBev, China Resources, and Tsingtao Beer have quickly launched their own tea-flavored and fruit-infused premium beers once they saw Jinxing's success.
- As a smaller brand with limited distribution channels and brand strength, Jinxing can only compete on the novelty of its tea-based beer. However, imitating the giants' packaging may lead to legal issues.
4. Internal Governance Issues: Uneven Treatment for Shareholders and Distributors
Jinxing's internal practices have raised doubts:
- Different Share Prices: The owners and employees buy shares at significantly lower prices than distributors, which is questionable given that distributors are crucial to the company's success.
- Large Dividends Before Listing: Three dividends totaling 329 million yuan were distributed between March and October 2025, with the Zhang family holding over 90% of the shares. This suggests that the company may have been using profits to enrich itself before going public rather than investing in growth.
5. How Long Can the Success of Tea-Based Beer Last?
Even if Jinxing succeeds in going public, its growth could be short-lived:
- Short Lifespan of Hits: Premium beers rely on novelty to attract consumers, but their repeat purchase rates are lower compared to traditional industrial beers.
- High R&D and Marketing Costs: Maintaining popularity requires the launch of new products and substantial marketing efforts, which may lead to a decline in gross profit margins (currently 52%).
- Competition from Giants: The beer industry is highly concentrated, and it is difficult for smaller brands like Jinxing to compete against giants. For example, if AB InBev decides to enter the market with even cheaper tea-based beers, Jinxing may not be able to withstand the competition.
Conclusion
While Jinxing Beer's success with tea-based beer is undeniable, its over-reliance on a single product, internal governance issues, and competition from industry giants create uncertainties about its ability to go public and sustain long-term growth. As experts have noted, "Small companies can only pursue new opportunities, but larger players can easily overshadow them." How long Jinxing's story with tea-based beer will continue depends on its ability to address these weaknesses—either by finding another source of growth or by resolving its internal problems. Otherwise, it may return to its previous mediocre state.