The brewer could become Hong Kong's first new beer listing in years, delivering high growth by pivoting to craft beers in an otherwise stagnating industry

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Key Takeaways:

• Kingstar Brewery has filed for a Hong Kong IPO, showing notably strong results through its strategic shift toward craft beers
• The regional brewer's profit soared nearly 11-fold in the first nine months of last year, as its gross margin rose about 20 percentage points from 2023

As a banner year for IPOs concluded last month, the Hong Kong Stock Exchange had every reason "to raise a glass" to celebrate its status as the world's largest market in terms of annual fundraising. Now, investors could soon have another more concrete reason to raise their glasses, with the market's first new beer listing in years.

That application is coming from Henan Kingstar Brewery Co. Ltd., which submitted its IPO document to the stock exchange last week. A successful listing would end a dry spell for Hong Kong beer listings dating back to 2019, when Budweiser Brewing Co. APAC (1876.HK), the Asian arm of the U.S. beer giant, floated shares.

After two decades of rapid growth, China's alcoholic beverage market has plateaued in the last few years. As consumption volume peaks, many beer makers are turning to product refinement and diversification in search of new growth, serving up a greater variety of offerings to entice consumers for another round.

Among the many strategies they're trying, craft beer represents one of the fastest-growing segments. Third-party market data in Kingstar's listing document shows China's craft beer market expanded from about 12 billion yuan ($1.72 billion) in 2019 to 63 billion yuan in 2024, rising by an average of more than 35% annually. The shift has provided a golden opportunity for new growth among traditional breweries like Kingstar that have jumped on the craft beer wagon.

Established in 1982, Kingstar has long centered its operations on North China's Henan province as its core market, typical of the dozens of regional brewers that once dotted a fragmented Chinese beer landscape. Its historical edge stemmed primarily from its strong local distribution capabilities and cost controls, rather than its premium brand. But its prospects increasingly darkened as the rest of China's massive beer sector consolidated around a few major players, creating a handful of national giants.

Chinese-style craft beer

As the market gradually saturated, Kingstar was forced to adjust its product mix to stay competitive. It launched its first Chinese-style craft beer, Kingstar Maojian, in August 2024, drawing on Chinese tea culture to flavor its products. It subsequently expanded to include craft beers flavored with jasmine tea, hawthorn candy and mandarin oranges, as well as other flavors with stronger local resonance. Such an approach is increasingly common among Western food and beverage companies in China, which often turn to local ingredients to make their products more palatable to Chinese customers.

The tea and fruit products Kingstar uses reduce the bitterness of its craft beers, emphasizing crispness, smoothness and memorable elements. That approach aligns more closely with taste preferences among younger consumers, while allowing the company to pick up female and other more casual drinkers. Its rapid move into Chinese-style craft beers gave Kingstar a portfolio of 50 such products by the end of last September, as it established a new tempo of frequent new launches and swift marketing campaigns.

Financial rewards have quickly followed, with Kingstar's revenue surging 105% year-on-year in 2024 to about 730 million yuan. The growth accelerated last year, as revenue nearly tripled to 1.11 billion yuan in the nine months through last September from 380 million yuan a year earlier.

Craft beer was the clear catalyst behind the revenue explosion. Such products went from zero in 2023 to bring in 377 million yuan the next year, representing 51.7% of the company's total revenue for 2024. Craft beer's contribution continued to grow last year, rising to 867 million yuan in the first nine months of 2025, accounting for 78.1% of the total for that period.

Explosive growth

Compared to traditional beer, craft beer typically uses a higher proportion of malt, hops, and specialty ingredients, resulting in higher per-unit production costs. But such products typically also sell for more. An average bottle generally falls within the 10 yuan to 20 yuan range, and certain unique flavors or small-batch products can even sell for over 20 yuan. Those prices are far higher than traditional beers, which typically cost 3 yuan to 5 yuan per bottle.

The company's gross profit margin also bubbled up sharply as craft beer became Kingstar's main money spinner, rising from 27.3% in 2023 to 37.8% in 2024, and advancing further to 47% in the first nine months of 2025. That increase of nearly 20 percentage points in just three years looks remarkable for any industry, especially a traditional one like beer.

The transformation has also catalyzed the company's bottom line. Its profit skyrocketed from a modest 12.2 million yuan in 2023 to 125 million yuan in 2024. It rose further still to around 305 million in the first nine months of last year, up nearly 12-fold from the 25.53 million yuan in the same period of 2024.

But the craft beer market also has its darker side, led by product lifecycles that are far shorter than those for traditional beer. Consequently, shifting consumer preferences and fading appeal for popular flavors force companies to continually develop new products and market them aggressively to sustain their revenue momentum. Moreover, as its number of craft beer products has exploded, Kingstar's inventory levels also have increased. A sales slowdown could quickly force the company to take inventory write-downs and boost its promotional activity, pressuring its margins and bottom line.

Attractive high gross margins for craft beers also inevitably attract new competitors. Those include national market leaders, which have accelerated their own introduction of new craft or premium products in recent years. These established players inevitably hold stronger competitive advantages in terms of brand influence and distribution compared to a regional player like Kingstar.

On the financial front, Kingstar may also have difficulty selling its story to Hong Kong stock investors who aren't especially enamored with alcohol and consumer stocks these days. As a case in point, Budweiser APAC's stock has declined by 64% since its 2019 listing, reflecting concerns about the industry's future growth potential.

All that said, Kingstar could still present an attractive new flavor for investors compared with traditional brewers due to its high margins and heavy focus on craft beers. Beyond its impressive headline figures, investors will undoubtedly focus on whether the company can establish a more stable, sustainable business model in a segment with short lifecycles, growing competition, and rapidly changing consumer tastes. This capability may ultimately prove to be the critical factor that persuades investors to take a swig or to pass on Hong Kong's first new beer offering in years.

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Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.