<div id="readability-page-1"><div id="news-body">(Yicai) May 7 -- Five of the seven beer companies listed in mainland China reported higher gross profit margins in the first quarter compared with a year earlier, as they pivot toward high-end products to drive profitability in a saturated market.Of the five, Guangzhou Zhujiang Brewery, Beijing Yanjing Brewery, Chongqing Brewery and Tsingtao Brewery all saw their gross profit margins expand by one percentage point year-on-year in the first three months, according to their first-quarter financial reports.And the industry continues to be profitable. The seven beer companies listed on the mainland raked in combined net profit attributable to shareholders of CNY2.6 billion (USD390 million) in the first quarter, a year-on-year jump of 6.1 percent. However, despite these gains, China’s beer production has been on the decline for two years in a row. Last year, output from large-scale enterprises dipped 1.1 percent last year from the year before to 35.3 million kiloliters. As the market becomes more saturated, beer companies have been shifting their focus to the off-premises market, which refers to consumption of products away from the place of purchase, and upgrading product quality to drive profit growth.Tsingtao Brewery’s net profit attributable to shareholders jumped 5.2 percent in the first three months from a year ago to CNY1.8 billion (USD264 million). Sales of its mid-to-high-end beers grew faster than its core brand, Tsingtao Beer. Sales of Tsingtao Beer edged up 0.4 percent to 1.3 million kiloliters, while that of its mid-to-high-end products advanced 3.1 percent to 1.04 million kiloliters.Yanjing Brewery’s net profit surged 60.2 percent over the period to CNY265 million (USD38.9 million). The company said that it continues to promote the upgrading of its products to a higher-end market.Although Chongqing Brewery’s net profit slumped 7.4 percent in the first quarter from a year earlier to CNY438 million (USD64.4 million), its main business revenue climbed 0.2 percent to CNY4.2 billion (USD617.5 million). Of this, revenue from high-end products climbed 2.4 percent to CNY2.6 billion, outperforming mainstream product growth.The catering channel remains under pressure, while the shift toward off-premises consumption has been ongoing for the past two to three years, Chongqing Brewery President Li Zhigang told Yicai. The company is focusing more on off-premises channels, such as supermarkets and e-commerce platforms.&#34;Our off-premises strategy is divided into three parts,&#34; said Li. &#34;The first is to drive the growth of major brands such as Carlsberg, Tuborg and Wusu, the second is to solidify our existing market share, and the third is to build future growth drivers, such as developing one-liter canned beer as a new flagship product.&#34;Editor: Kim Taylor</div></div>

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Five of the seven beer companies listed in mainland China reported increased gross profit margins in Q1, driven by a shift towards high-end products. The combined net profit for these companies reached CNY2.6 billion (USD390 million), a 6.1% year-on-year increase. Notably, Tsingtao Brewery's net profit rose 5.2% to CNY1.8 billion, while Yanjing Brewery saw a 60.2% surge to CNY265 million. Despite these gains, beer production in China has declined for two consecutive years, prompting companies to focus on off-premises sales and product upgrades.

Premium Beer Strategy Swells Profit Margins at Chinese Brewers