Ask AI · How to Break the Deadlock Between High-End and Local Brands After Eliminating Internal Competition?

Produced by | Bullet Finance

Author | Guo Yuan

Editor | Egg Boss

Design | Qian Qian

Review | Song Wen

Recently, Chongqing Beer released its 2025 annual report, reversing the negative growth trend of 2024.

Data shows that in 2025, Chongqing Beer achieved sales of 2.9952 million hectoliters, up 0.68% year-on-year; revenue of 14.722 billion yuan, up 0.53%; and net profit of 1.231 billion yuan, up 10.43%.

Objectively speaking, it is commendable that Chongqing Beer can maintain growth under industry pressure. According to the National Bureau of Statistics, in 2025, the total beer production of large-scale enterprises in China was 35.36 million hectoliters, down 1.1% year-on-year.

Notably, beyond releasing its earnings, Chongqing Beer also distributed a large dividend, planning to pay all shareholders a cash dividend of 1.20 yuan per share (tax included), totaling 520 million yuan. Including the mid-year dividend of 630 million yuan in 2025, the total dividends for the year reached 1.21 billion yuan, accounting for 98.3% of the net profit for the year.

However, behind this “generosity,” there are also concerns.

Currently, Chongqing Beer’s core market is losing ground, its high-end brands are growing sluggishly, domestic brands lack growth momentum, distributor receivables are declining, and marketing-driven growth models are hindered… Multiple difficulties are affecting its fundamentals and adding uncertainty to future performance.

1. Surface growth but real pressure, sales expenses exceed 2 billion yuan

Bullet Finance carefully studied Chongqing Beer’s announcement and found that the sharp increase in net profit may have little to do with its actual business operations.

In March 2025, Chongqing Beer announced that due to a lawsuit with Chongqing Jiawei, it had made an impairment provision in its 2024 financial report, deducting part of the funds on the books in advance.

(Image / Chongqing Beer Litigation Progress Announcement)

This directly lowered Chongqing Beer’s net profit attributable to shareholders in 2024. Based on this low base, its 2025 net profit achieved double-digit growth.

This indicates that growth is actually under pressure, which is a true reflection of Chongqing Beer’s current situation: stagnant sales and revenue growth, with real earnings also declining.

As an important indicator of core business, Chongqing Beer’s non-recurring net profit in 2025 was 1.188 billion yuan, down 2.78% year-on-year.

Looking at the data, in 2025, Chongqing Beer’s gross profit margin was 52.03%, up 2.32 percentage points year-on-year; operating costs decreased by 3.77%; meanwhile, non-operating gains and losses shifted from -107 million yuan in 2024 to 43.17 million yuan.

Therefore, the growth in Chongqing Beer’s net profit is not from comprehensive expansion of its main business, but from improvements in gross profit margin, cost reductions, and non-recurring gains and losses.

From the expense perspective, Chongqing Beer’s marketing investment is not cost-effective.

In 2025, Chongqing Beer ramped up marketing efforts, launching intensive campaigns for several core products through celebrity endorsements, sports events, and variety show collaborations to strengthen brand promotion.

For domestic brands, Chongqing Beer signed Chen Xiaochun and Jike Junyi; Wusu signed Fan Chengcheng and Fu Hang; Fenghuaxueyue partnered with Yang Chao Yue.

International brands included Carlsberg signing Huang Zongze to reinforce the brand concept of “If you understand pursuit, drink Carlsberg”; 1664 signing Wu Lei to create the “Blue Mood” consumption scene; Löwenbräu signing GAI Zhou Yan, Wannie Da, and GALI to promote the “Play Why Not” series marketing.

Additionally, Wusu sponsored “Running Man 13,” Carlsberg established a long-term strategic partnership with UEFA, and jointly launched the “Football Miracle Can” with Liverpool FC. “Chongqing Pure Draft,” “Carlsberg,” and “Tianmuhu Whole Malt” linked to marathons in Wanzhou (Chongqing), Liuzhou (Guangxi), Yancheng and Changzhou (Jiangsu).

Signing over ten celebrities, sponsoring multiple sports events and variety shows, directly caused Chongqing Beer’s sales expenses to rise to 2.655 billion yuan in 2025, up 5.66%, exceeding revenue growth.

(Image / Visual China, based on VRF protocol)

Chongqing Beer’s President Li Zhigang admitted at the earnings meeting that the increase in sales expenses mainly stems from “external environment challenges, with the company increasing marketing investment in high-end products.”

While sales expenses grew, management expenses in 2025 increased by 15.77%, but R&D expenses dropped sharply by 29.94%, showing a clear divergence.

However, this expense structure did not fully translate into profits. Chongqing Beer’s performance in the fourth quarter of 2025 showed a turning point, with a net profit of -10.0338 million yuan and a non-recurring net profit of -34.3397 million yuan, turning from profit to loss in a single quarter.

From the performance quick report of beer companies in 2025, Zhujiang Beer’s revenue and net profit growth outpaced Chongqing Beer; Yanjing Beer’s net profit is expected to increase by 50%-65%, and Reeb Beer’s growth rate is clearly not advantageous.

Independent industry commentator Xiao Zhuqing analyzed that the faster growth of sales expenses compared to revenue in 2025 reflects the nature of deep stock competition in the beer industry.

He believes that the increase in sales expenses is a defensive strategy of “maintaining share” rather than “gaining growth.” This “cost-for-share” approach is difficult to avoid in the short term. During overall industry decline, it is a defensive investment—using increased marketing to hold the ground. But in the long run, if Chongqing Beer’s high-end product growth continues to slow, rising expense ratios will erode profit margins.

2. “Internal and external troubles” lead to loss of fundamentals, growth sluggish

In 2025, Chongqing Beer’s Central China market achieved revenue of 5.884 billion yuan, down 1.43% year-on-year, the only one of the three major regions (Northwest, Central, South) to decline.

(Image / Chongqing Beer 2025 Annual Report)

Historically, the Central region has been Chongqing Beer’s core market, accounting for nearly 40% of revenue in 2025. The decline in this region directly reflects the severe challenges Chongqing Beer faces in its traditional stronghold.

This is the result of “internal and external troubles” working together.

From “internal troubles,” the ongoing dispute with Chongqing Jiawei over exclusive sales lasted for years, ending only in January 2026 with a 100 million yuan settlement, which consumed substantial management resources and channel efforts during the process.

Meanwhile, the number of distributors in the Central region fluctuated significantly, ending the reporting period with 1,427 distributors—adding 316 and reducing 289 during the period—indicating substantial channel restructuring.

(Image / Chongqing Beer 2025 Annual Report)

Financial data shows that Chongqing Beer’s accounts receivable increased nearly 40% year-on-year in 2025, mainly due to increased credit limits granted to distributors. This means longer receivables cycles and decreased collection ability.

Looking at “external troubles,” in recent years, giants like China Resources and Tsingtao have continued to increase their investments in the Southwest market, squeezing Chongqing Beer’s space for survival. Meanwhile, domestic brands have risen strongly, also impacting Chongqing Beer.

For example, in Guiyang, according to the 2026 provincial government work report, within 600 square kilometers of the city, over 1,200 craft beer bars are hidden in streets and alleys, ranking among the highest nationwide. Notable brands like Hammer Craft, TripSmith, Tapstar, and Dasheng have emerged, forming an industrial chain from raw material planting to processing and consumption.

In 2025, the Guiyang Craft Beer Industry Association was established, marking a new stage of organized and standardized development for Guiyang’s craft beer industry.

These brands, through deep regional channel penetration, launching products tailored to local tastes, and employing more consumer-close marketing strategies with lower channel costs, continue to erode Chongqing Beer’s market share.

(Image / Visual China, based on VRF protocol)

Xiao Zhuqing told Bullet Finance that as consumer scenarios change, markets in Chongqing, Sichuan, and other bases face consumption pressure, with the on-premises drinking channels weakening. Domestic brands in Chongqing are struggling to grow, while international high-end brands have not fully penetrated the mass market, resulting in a “blue-yellow disconnect.”

“Currently, Chongqing Beer should focus on stabilizing its core market before expanding outward. The decline in Central China has already dragged down overall performance. If the fundamentals continue to weaken, external expansion will lack resource support,” Xiao Zhuqing added.

Regarding products, Chongqing Beer classifies its products into three categories by price: above 8 yuan as high-end, represented by Carlsberg, Löwenbräu, K1664, and Red Wusu; 4-8 yuan as mainstream, represented by Chongqing, Wusu, Dali, Xixia; below 4 yuan as economy, with core products like Xixia, Shancheng, Chongqing.

In recent years, the growth of high-end products, which have received resource tilt, has continued to slow. In 2025, high-end products grew by only 2.19%, far below the 5.18% in 2023, indicating insufficient high-endization momentum.

Media reports previously indicated that Chongqing Beer’s secondary distributors are forcibly sold high-end products by primary agents each year, with some products becoming unsalable. Specifically, international brands under Carlsberg, such as “1664” white beer and fruit-flavored beers, and summer strawberry cider, are involved.

They believe that international and high-end products are more suitable for nightclubs, bars, and similar channels, while their main business is mass catering, with best-selling mid- and low-end brands. Due to channel mismatch, sales are difficult, leading to losses.

In 2020, Chongqing Beer began disclosing revenue data for international and domestic brands, showing a clear divergence.

It is evident that Chongqing Beer’s international brands demonstrate strong resilience, with revenue rising from 3.707 billion yuan to nearly 5.5 billion yuan over six years, maintaining positive growth and becoming a pillar of its performance. Conversely, domestic brands’ growth has slowed, with revenue in 2024 experiencing negative growth for the first time, and in 2025, the decline narrowed but still fell 0.64% year-on-year.

Under the dual pressures of sluggish high-end growth and shrinking domestic brand revenue, product adjustments by Chongqing Beer have failed to keep pace with changing consumer trends.

In 2025, Chongqing Beer launched over 30 new products across flavor, packaging, and channels, including large 1L bottles.

Xiao Zhuqing believes that the 1L bottles are essentially competing for the traditional small bottle market rather than creating new volume; moreover, production equipment is not yet capable of efficient, large-scale manufacturing, so growth potential is limited.

An industry insider told Bullet Finance that Uusu Beer, Chongqing Beer’s flagship product, had an overall sales volume of about 800,000 tons in 2025, supporting Chongqing Beer’s performance. But the 1L and 8.8L products currently do not have conditions to become major products; they are more exploratory, generating buzz and encouraging consumer content sharing, catering to fragmented market needs under industry competition.

“Uusu has some buzz, but because of its high alcohol content, many find the taste difficult to adapt to. 1664, although favored for its minimalist, fashionable, high-end image, is also limited by high price and low cost-effectiveness of small bottles,” said bar owner Ming Liang to Bullet Finance.

3. Shedding historical baggage, can Chongqing Beer return to growth?

“The Mountain City Beer, ‘Knowing Friends’—this slogan has accompanied several generations in Chongqing, witnessing the city’s history and becoming an emotional and cultural bond for its people.

But now, when you walk into countless hotpot and skewers shops in Chongqing, it’s hard to find traces of Mountain City Beer.

According to Chongqing Jiawei’s disclosed data, in 2013, Mountain City Beer sold nearly 1 million tons, with a 95% market share, and a brand value exceeding 6 billion yuan, contributing over 90% of Chongqing Beer’s revenue.

The harmonious relationship between the two began to fracture after Carlsberg’s acquisition of Chongqing Beer. Carlsberg had promised to grow Mountain City Beer, but after taking control of Reeb Beer, its strategy shifted toward high-end positioning, promoting its own brands like Carlsberg and Löwenbräu. Mountain City Beer was downgraded to an “economical product,” with marketing resources sharply cut, leading to declining sales and market share.

(Image / Visual China, based on VRF protocol)

Chongqing Jiawei issued a statement blaming this, and by 2023, “Mountain City” beer sales had fallen below 100,000 tons, accounting for less than 3%.

Some distributors reported that outlets selling Carlsberg and Löwenbräu often prohibit sales of Mountain City Beer, or risk supply cuts. Many consumers said only specialized alcohol markets have a chance to buy Mountain City Beer.

This stems from legal disputes. The two sides signed a “Strategic Cooperation Agreement” in 2007, a “Product Exclusive Sales Framework Agreement” in 2009, and a “Supplementary Agreement” and “Product Exclusive Sales Memorandum” in 2016, along with multiple other memoranda. The 2009 framework agreement was for 20 years, stipulating that only Jiawei could produce “Mountain City” beer during the exclusivity period, and all beer produced had to be sold through Chongqing Beer.

In recent years, Chongqing Jiawei has raised multiple objections to this exclusive arrangement, claiming Chongqing Beer’s actions caused losses, and filed lawsuits. Chongqing Beer counterclaimed, alleging Jiawei relied on OEM profits for excess gains.

In early January, Chongqing Beer announced that the contractual dispute with Jiawei had been settled through court mediation.

According to the mediation, Chongqing Beer paid Jiawei a one-time cash settlement of 100 million yuan to settle all quantity and price difference claims up to December 31, 2025. After payment, all disputes over the previous exclusive sales agreement would be resolved, with no further claims or liabilities.

(Image / Visual China, based on VRF protocol)

The mediation also clarified future cooperation from 2026 to 2028: Chongqing Beer will annually purchase 142,600 hectoliters of beer from Jiawei at 4,000 yuan per thousand liters (excluding VAT), settled annually with adjustments. After the end of the exclusive sales agreement in 2028, both sides will cease cooperation.

If the mediation is smoothly implemented, Chongqing Beer will successfully shed the long-standing “baggage” of disputes.

So, after shedding this historical burden, can Chongqing Beer return to growth?

“Paying 100 million yuan to end this prolonged internal conflict is most directly about ‘stopping the bleeding’ and ‘lightening the load.’ It eliminates legal uncertainties and allows management to refocus on market expansion. More importantly, it provides a valuable breathing space for stabilizing the Central China market,” said media person Qing Qing to Bullet Finance.

But this has not brought new growth drivers. For true recovery, Chongqing Beer needs to find a new balance between high-endization and localization, making international brands more relatable and revitalizing domestic brands. This strategic challenge will require deep reflection from its management.

Main image source: Visual China, based on VRF protocol.