印刷包装行业分析报告bain贝恩资讯

1、Outside in intelligenceInterim update for Project OceanMay. 15th, 2013Recap of China battlefield strategyStrongholds/profit sources of big 4 competitorsABI battlefield rolesRedPlayersGreenYellowAquaStrongholdBattlefieldsAggressive attackNeed to continue to compete aggressively for competitive reason

2、sNo clear leader, so continue to invest, but not at same level as aggressive attackABISource: ABI 3 year plan; Competitor interviews; Bain analysisExtensive research with company experts, competitors, and multiple industry data sourcesSecondary sourcesTax returns and ownership structure from SAIC Ta

3、x returns of Ocean, 2008-2011Filings of ownership structure of OceanFilings of ownership structure of Ocean Beer and Beverage Co. and other 3 related companiesIndustry research and association reports“2012 China Beer Company Report” published by China beer associationOther 3rd party analyst reportsL

4、it researchNews release, media coverage and commentary from Factiva/ Thomas ResearchCompetitors annual reportsCredit report on Ocean done by Communication Bank of ChinaCompany websiteSEEMA reportsABI industry “market map” 2008, 2011 and 2012ABI Shandong P&L for 2011 and 2012ABI strategic review on O

5、ceanABI dataPrimary sources: interviewees selected based on position and experience level (N=17)Former Sales Director of Zibo, OceanFormer Regional Sales Manager of Zibo, OceanSales Manager of South Shandong, OceanSales Manager of Weifang, OceanSales Manager of Heze, OceanSales Manager of Liaocheng,

6、 OceanFormer National Sales Director and Customer Service Manager, RedFormer Sales Manager of Zibo, RedSales Manager of Zibo, RedSales Manager of Weifang Urban, RedSales Manager of Weifang County, RedSales Manager of Weifang, GreenTarget (N=6)Competitors (N=6)2 T1 Wholesalers of Ocean in ZiboT1 Whol

7、esaler of Red in ZiboT1 Wholesaler of Ocean in CangzhouT1 Wholesaler of Ocean in JiningWholesaler (N=5)Goals/targetsBattlefields and prioritiesBusiness modelOrganizationCorporate organization structureRegional organization (BUs)Profile/background of key management (at corporate and BUs)Historical an

8、d impending movementsPerformance mgt for BUsTarget settingKPIsCompensation/incentives for key mgt and sales (estimated levels)Major types of RTM models and evolution, focus on 2-3 types of citiesM&A (historical, plans, potential targets), and integration approachJV/partnerships with other players (h

9、istorical, future plans)Expansion model (combining geographic, segment/brand, channel drivers)Brewery footprint and capacity (current, future greenfield plans)Key brands: role and positioning (current, future plans)Key strategic drivers to achieve targetsGeographic (home province only)Geographic foo

10、tprint (current, future plans)Contribution to volumes and profits of key citiesPrice segment/brands:Mix (current, future plans)Contribution to profitsChannel (penetration):Current focus, future plansHistorical and future targets for Overall position in China; volumes, revenuesProfitability, returnsS

11、hareholder/management expectations and aspirations (short vs. longer term), including importance of China, beer vs. other businesses, top vs. bottom line etc.1234567891314151011121617 For Interim update For Final update “Light touch”Proposed scope for Project Ocean intelligenceExecutive summaryBusin

12、ess fundamentals and Shandong strategic positionShareholders and organizationPotential strategic value(hypothesis for now)Majority share of Ocean is controlled by a group of 7 individuals through two entities; winning the deal just requires Liu Xunfu, who owns 70% of OceanLiu Xunfu is open to sell g

13、iven isolation by Red; however prior discussions with Red indicate valuation expectations and lack of urgency to sell (business is generating decent cashflow)Intercompany interests between Ocean and Baijiu/food OEM businesses need to be further understood and considered as part of deal negotiation4%

14、 share of Shandong market, but close follower to Red in Zibo with 40% share Track record of growing volumes and share in Zibo and neighboring cities in the last 4 years, at the expense of other local playersMaintained profitability in the last 4 years primarily due to less intense competition from R

15、edRelatively strong model in Zibo stronghold (60% of volumes)High local brand awarenessLarge and experienced sales team, capable of implementing Grid RTM since 2004Wholesale-driven model in neighboring cities; with limited brand pullStrategic value of Ocean for ABI needs to be further testedBy acqui

16、ring Ocean, ABI will establish a footprint in central Shandong, and establish a base to disrupt Red in ShandongABI will also gain immediate access and volume in Zibo, where the newly acquired Sky brewery is locatedNeed for a clear disruption strategy for Shandong and/or strategy of how to leverage O

17、cean/Zibo for surrounding provincesBusiness fundamentals and Shandong strategic positionShareholders and organizationNext stepsAgendaCompany profile*Historical performanceOverall position#4 in ShandongSales volume1.4 MHL in Shandong0.1 MHL in HebeiProfitability8% EBIT marginROE5%Total employee600 (2

18、30 sales / 370 production and others)Capacity / Products2.5 MHL / Bottled and can beer# of breweries1 in Zibo, Yiyuan County (2.5 MHL)Established in 1996Ownership70% owned by Liu Xunfu, Chairman of Ocean30% owned by other 17 individuals (mainly company management team)Notes: Net revenue is gross tur

19、nover less WS discounts and VAT; *Net profit margin from tax return;*As of FY 2012Source: SAIC tax returns; SAIC ownership structure; Expert interviews; Market map; Ocean credit report done by Communication bank of China; Lit search; Bain analysisTrajectory of Rev/HL indicates large investment amoun

20、t. Rev/ HL needs to be further validated with company financialsVolume grew by 30% in 2010Historical performance: Ocean has managed to grow volumes while maintain profitability in the past 4 yearsTax returnCredit reportHistorical trajectory and future targetsSource: Expert interviews; SAIC tax retur

21、ns; Ocean credit report done by Communication bank of China; Lit search; Bain analysisVolume targetMargin target“According to the Oceans 5 year plan, the company will increase capacity to 4 MHL, double sales volume to 3 MHL, increase revenue/ HL by 40% and become a influential brand with high compet

22、itiveness within Shandong province in 2016.”Ocean credit report, Communication Bank of China Zibo BranchFuture target: Ocean aims to double its sales volume in 5 years “Ocean will work hard to achieve 3.5 MHL of sales volume in the next 5 years, by doubling the volume in Zibo and attack aggressively

23、 in neighboring cities. Ocean will also increase price accordingly if main competitor Red does so.”Mr. Liu, Former Sales Director of Zibo, OceanCAGR/ Change in margin(Volume CAGR)(Change in net profit margin)Historical performance: Tax return and bank credit report not alignedDefinition2008200920102

24、0112012Tax returnCredit reportTax returnCredit reportTax returnCredit reportTax returnCredit reportBeer associationTurnover (disclosed)Gross turnover less WS discount and VAT; In M RMB 104 297 106 295 109 340 112 373Excise tax and other tax surchargeOther tax surcharges include urban construction ta

25、x and education surcharges 1221132315281340Net revenue (disclosed)Turnover less exercise tax ; In M RMB92276922729431299333Revenue/HLRMB per HL1133231103078727282230(-) COGS66194641756520766COGS %As % of net revenue71%70%69%65%69%66%67%Gross profit278228962910533Gross profit marginAs % of net revenu

26、e29%30%31%35%31%34%33%(-) Operating expensesIncluding marketing and trade spend9101011Operating expenses %As % of net revenue10%11%10%11%(-) General and administrative expenses11111112Operating profit10.9Operating profit marginAs % of net revenue7.4%8.6%8.8%10.9%(+) Profit/loss from other b

27、usiness0000EBIT10.9EBIT marginAs % of net revenue7.4%8.6%8.8%10.9%(+) Non-operating profit/lossInclude interest income, interest expenses, etc.2.22.02.24.7(-) Income tax1.0Effective tax rate22%27%26%25%Net profit3.614.44.321.04.526.64.615Net profit marginAs % of net revenue3.9%5.2%

28、4.6%7.7%4.8%8.5%4.6%4.6%Source: SAIC tax return; Audited financial statements; Credit report on Ocean done by Communication bank of China; China beer associationRev/hl is either much higher or much lower than comparable targets, e.g., Juice and Polaris BDBig disparity of topline between tax return a

29、nd credit reportHuge variance in net profit from two sources, to be further assessedGross margin from tax return are slightly lowerTopline from China beer association aligned with trend of credit reportOcean slightly gained market share in past 4 years, together with Red, from other local playerOcea

30、n is a distant follower in Value and Core segments*CAGR calculated based on combined 2008 sales volume for those merged during 08-12Note: Other players include Taishan beer, Kedaier beer, Weihai beer and other 20 local breweriesSources: SEEMA; Market Map; Expert interviews; Red annual report; Lit se

31、arch; Bain analysisMarket share evolution: Ocean is #4 in Shandong with 4% market shareGain shareLose shareHistorical trendEvolution of profitability and strategic position: Ocean slightly gained share and improved profitability20.0%12510RedRed*GreenGreenYellowYellowOceanOceanABIABI6 MHLSalesvolume1

32、0.0%0.0%-10.0%-20.0%Relative market shareReturn on sales (EBIT margin %)The RMS for the market leader is calculated relative to the # 2 playerThe RMS for all other players is calculated relative to the market leaderCompetitive dynamics in Shandong 2008-2012Description20082012GreyColorNotes: ABI EBIT

33、 margin calculated by EBITDA % and average % of D&A *Volume size of Red include Yinmai and BaotuquanSources: ABI internal data; SAIC tax returns; SEEMA; Competitor financials; Annual reports; Bain analysisOverall Shandong market became more consolidatedSmall players lost significant shareImproving p

34、rofitability overall as a result of market consolidationRed:Market leader, who treats SD as its No.1 stronghold, is striving for more share and profit in SD in order to feed other unprofitable provincesGreen:Strengthened #2 position, gained share especially in West ShandongYellow:Stagnant growth; sl

35、ightly increased profitability due to investment reductionOcean:#4 player, increased profitability as result of trading upABI:Minor share, mainly play in NLMarket position across cities: Ocean maintains stronghold position in Zibo20082012Market share20-40%40%5-20%5%Source: SEEMA; Market map; Expert

36、interviews; Competitor financials; Lit search; Bain analysisOcean x 1BreweriesYellowABIRedAttack directionMarket positionOceanGreenHebeiHenanYantaiWeihaiRizhaoQingdaoWeifangLinyiZaozhuangJiningHezeTaianLaiwuZiboJinanLiaochengDezhouBinzhouDongyingAnhuiJiangsuYantaiWeihaiRizhaoQingdaoWeifangLinyiZaozh

37、uangJiningHezeTaianLaiwuZiboJinanLiaochengDezhouBinzhouDongyingNote: *Off-trade price rangeSources: Market map; Expert interviews; Lit research; Bain analysisBrand and product portfolioVolumecontribution9%65%Details1%25%Brand: Value and Core contribute over 90% of total sales volume-6RMBCoreValue6 R

38、MBOcean Jinchun (金纯)Ocean Jingshuang (晶爽)Ocean V10 (兰莎V10)Key sub-brandsOcean Gold Malt Fragrance (金麦香)Ocean refined brew (精制)Ocean Malt Fragrance Jingpin(精品麦香)Ocean Youshuang (优爽)Ocean light expert (清爽专家)Ocean Malt Fragrance (麦香)Ocean light beer (清爽)*Incl. Core and Core+ products Sources: Expert in

39、terviews; Market Map; Bain analysisBrand: Premiumization has been a strategic focusOceans plan is to up-trade to enlarge Core and Core+ segments“Ocean strategically traded up the product portfolio in past few years. Percentage of mid-end* products increased 20%, thus notably improving our profitabil

40、ity. Company aims to further expand the mid-end segment in future.”Mr. Zhang, Former Regional Sales Manager of Zibo, Ocean“Ocean that was widely-known for its value products have been shifting its product mix since 4-5 years ago. It is expanding into Core and Core+ by introducing upgraded products o

41、f Malt Fragrance into market.”Mr. Chen, Former Sales Manager of Zibo, RedDIRECTIONALTrendPremiumCore+CoreValueCurrent positionBattlefield cities and rolesMarket share20-40%40%5-20%5%Traditional strongholds (already key volume and profit generators)Strategic battlefieldsAttack (target areas for volum

42、e growth in next 5 years)Pipeline (expand through W/S network)OpportunisticOcean x 1Source: Market map; Expert interview; Lit search; Bain analysisBattlefields: Battlefield strategy based on existing share of city markets and competition intensity of RedBreweriesYantaiWeihaiRizhaoQingdaoWeifangLinyi

43、ZaozhuangJiningHezeTaianLaiwuZiboJinanLiaochengDezhouBinzhouDongyingYantaiWeihaiRizhaoQingdaoWeifangLinyiZaozhuangJiningHezeTaianLaiwuZiboJinanLiaochengDezhouBinzhouDongyingCangzhou(Hebei)Cangzhou(Hebei)4_84 3_84 8_84 306_84HebeiShandongShandongShandongHebeiShandongOcean relies on Sales GMs personal

44、 network to tap into Cangzhou marketOpportunistBattlefield plans: Ocean focuses on Zibo and neighboring cities plus Cangzhou for volume growthTraditional strongholdsPipelineApproach(brands, trade marketing activities etc.)AttackABCCompetitive threatsZibo (60% vol. contribution)Weifang, Cangzhou, Lin

45、yi and Laiwu (30% vol. contribution)Dongying, Binzhou, Dezhou (7-8% vol. contribution)Other cities in ShandongTraditional strong market position (#2 in Zibo); source of profitsModerate market share (sizable position in some counties)Limited position (5% even in counties)Minor positionDefend aggressi

46、vely via POC buyout if Red increases investmentsRaise brand awareness (e.g., beer festival, advertising, etc.) Focus on 2-3 county-level cities or districts and drive for leadershipStrong control on WS and in-depth coverage of POCs in selective areaLeverage local W/S to develop POCs and drive shareC

47、opy Zibo/Weifang RTM model if considerable shares establishedOpportunistically exploit weakness/ market gapSell opportunistically, and deal with ad hoc orders in most of timeTrade up by pushing more Core and Core+ productsContinue drive volume share in Value/Core and expand into Core+Expansion focus

48、ed on Value and Core productsIdentify and lock in qualified W/SRed steps up investments, especially in POC buyout, driving profit downCompetitors over invest in CD and TTRed further leverage resources to strengthen presence and squeeze Ocean outCompetitors leaving no opportunity for OceanCitiesDDesc

49、ription Source: Expert interviews; Bain analysisZibo: Ocean is #2 in Zibo, gained share in recent 4 years*Sky ceased production in mid 2012, it had 3-4% market share in Zibo in recent yearsSource: Company financials; Expert interviews; Lit search; Bain analysishighlights Zibo market become more cons

50、olidated; Red and Ocean account for over 90% shareOcean gained share from other local playersOcean: outperformed the market and gradually reduced the gap with RedInvested heavily in branding by sponsoring Zibo Ocean Beer Festival since 2007 and inviting famous actor to endorse the brandMaintained po

51、sition in value and attack in Core and Core+ to gain shareEnhanced govt relationship through holding beer festival, supplied Ocean for govt consumptionRed: no change in market shareRed attacked the market ineffectively in 08-10Integration: Immense and Red team not well coordinatedSales team: Frequen

52、t change in management and unclear strategyRed reviewed the investment strategy in 2011 and 2012 and plans to attack the market more effectively in the futureZibo: Ocean leads in Value and gradually increasing share in Core and Core+Gain shareLose shareHistorical trendSource: Expert interviews; Lit

53、search; Bain analysisOcean is No.1 in Value with 65% shareValue segment is largest in Zibo; most Value products (70-80%) are consumed via C/D restaurantsOceans 2 popular SKUs “Malt Fragrance” and “Ocean light” are widely accepted by consumers, especially in C/DOcean strategically attack in Core and

54、Core+ over the past few yearsLaunched new SKUs (“Gold Ocean Malt Fragrance” and “Malt Fragrance Jingpin”) in Core+ and Core Exploiting price gap of Red products: the two new SKUs are priced at the prices in between Red GD, Zhongyou and LaoshanBundling sales of Value and Core/Core+ SKUs to POC at the

55、 early stageRed dominates in Premium with 80% sharehighlightsPipeline/OpportunisticAttack (Weifang, Cangzhou, Linyi and Laiwu)Stronghold, ZiboSales-led grid RTMSales-led grid RTMWS-led grid RTMPlanningSales target planningSales tactic planningSales rep managementDistribution & warehousingOrdering &

56、InvoicingPost-sales servicesChannel developmentChannel maintenance*Sales target planningSales rep managementOrdering & InvoicingPost-sales servicesChannel developmentSales target planningSales tactic planningSales rep managementPost-sales servicesChannel maintenance*ChannelLogisticsNote:*Channel mai

57、ntenance includes: contract renewal, POCM visibility, merchandising etc.Source: Expert interviews; WS interviews; Competitor interview; Lit search; Bain analysisWS in chargeOcean in charge# of Sales# of WS20 sales managers and 28 sales reps3 T1 W/S per city/county5 T2 W/S per city/county20 T1 WS, 2-

58、3 per county300 T2 WS10 sales manager and 100 sales reps200 T1 WS (100 in Yiyuan)500 T2 WS (no T2 WS in Yiyuan)Channel development8 sales managers and 60 sales repsRTM: Ocean used sales-led grid RTM in stronghold and attack markets, and WS-led grid RTM in pipeline marketsOceanT1 WS AB/CD/TTAB/CDOcea

59、nT1 WS T2 WSCD/TTAB/CD20% volumeOceanT1 WS T2 WSCD/TTCD/TT30% volumeT2 WSAB/CD5% volumeDistribution & warehousingOrdering & InvoicingSales tactic planningChannel maintenance*Distribution & warehousingWeifang(18% volume contribution)340 (25 for W/S, 15 for direct sales)5100% exclusiveAvg. volume shar

60、e 5%16060% exclusive9k20% exclusive75% (vs. Red 55%)210100100% exclusiveAvg. volume share 0.07%05k30% exclusive90%44017100% exclusiveAvg. volume share 0.8%13060% exclusive25.5k10 years experience in OceanSource: Lit Search; Expert InterviewsSources: Lit research; Expert interviewsOrganization struct