On March 26, 2019, China Foods Ltd. (00506.HK) announces its final results for the year ended 31 December 2018. The annual revenue and profits of China Foods Ltd. from its continuing operations reached 15,648 million (Unit: RMB, the same below) and 576 million, respectively 17.14% and 23.32% increase compared with last year with the dual growth in revenue and profits.

Statistics indicated that China Foods Ltd. improved the production and operation efficiency and kept the gross profit margin stable by developing new products and deepening regional integration, although the prices of main raw materials except sugar went up dramatically. Also, administrative expense margin decreased by 0.8%.

According to data released by Nielsen, China Foods maintained its leading position in the industry and the regions in which it operates. The total sales volume and market share by value of sparkling drinks, juices, bottled water, milk drinks and enhanced water reached 24% and 21% respectively. Sparkling drinks and juices continued to maintain a leading position, and market share of packaged water continuously was enhanced.

Under the theme of “Total Quality Improvement and Efficiency Enhancement, Achieving Innovation and Win-win Results” in 2018, China Foods Ltd. optimized business and promoted innovation. 35 new SKUs under 6 categories and 14 brands were launched during 2018, including upgrades of traditionally advantageous products (such as Coca-Cola and Sprite fiber + series) and expansions of categories (such as the overall upgrading of GEORGIA coffee and “Yo! Tea”, a fashionable tea drink with blended flavors). With upgrades of products and expansions of categories, it is beneficial for China Foods Ltd. to the growth in scale and improvement in product mix to and finally made it keep positive development trend.

Another important innovation is achieved by distribution channels. Targeting at new retail channels, especially various e-commerce platforms, China Foods Ltd. has established an e-commerce division to implement different marketing strategies according to traits of channel and work hard to replicate the competitive advantages in traditional channels.

Ms. Xiuju Luan, managing director of China Foods Ltd., stated that China Foods Ltd. would improve market position continuously by following consumer trend, optimizing product mix, enriching retail channels and satisfying consumer demands, and enhance profit margin by deepening regional integration, as the only focused beverage business within the COFCO Group. At present, company’s beverage business has maintained a sustainable pace of development. It is anticipated that the beverage industry will grow steadily attributed to expected stable development of China economy and upgrading of consumption in 2019. China Foods Ltd. will strengthen traditional products and channels. Meanwhile, it will upgrade existing products, launch healthy and fashionable new products, accelerate the development of new retail channels and seize more consumption scenes. All of those will help enhance profitability, business performance and bring higher investment returns to shareholders.