The calm on the surface of the functional beverage market has been broken.
Editor’s note: This article is from the WeChat public account “Caijing Wuji” (ID: caijwj), author: Xiao Tian. Original title: “See you for a long time! Can the high-sugar Dongpeng special drink have a market value that exceeds the vitality forest? 》
Can the first functional unit that has entered the consumer’s field of vision a “Yangkang Avenue”?
In 2016, China Red Bull began to enter into a long-term dispute with Thailand Tencel for trademark ownership. Major brands Beginning to continue to exert efforts, set off a “Eight-Power Allied Forces” to encircle and suppress Red Bull, hoping to quickly rise to replace Red Bull under this opportunity.
For Red Bull, although the vigorous battle did not ultimately shake the market position of “one super, many strong”, but after the entire industry shuffled, a biggest “follower”-Dongpeng was born. Special drink. It not only survived miraculously by imitating the “Red Bull”, but it also distanced itself from the second-tier brands and became the second in the industry.
Recently, Dongpeng Beverage, the parent company of this bottle of beverage, tried to launch an impact on the functional beverage market. On May 17, Dongpeng Beverage (605499.SH) opened the subscription, the subscription price was 46.27 yuan, the issuance price-earnings ratio was 22.99 times, and the capital raised was about 1.732 billion yuan. The estimated market value will reach about 14.9 billion.
Among the beverage companies that rely on strong single products to rise, there are many domestic listed companies that have achieved the ultimate in single product categories, such as Chengde Lulu (the main category is walnut dew, with a market value of 7.72 billion), VV Soy Milk (the main product) The category is soy milk, with a market value of 6.655 billion yuan), Yuanqi Forest (mainly low-sugar soda, valued at 14 billion yuan), and the market value of Dongpeng Beverage is not only the sum of the former two, but also exceeds the Yuanqi Forest.
You must know that before this, Dongpeng, who had been wearing “counterfeit drinks”, was accused of copying from Red Bull. How did it support such a high market value? It has become the first energy drink, can it really cross the mountain of Red Bull?
Functional beverages “battle to the beach”
Imagine a scenario, this year’s Dragon Boat Festival, a friend of Caijing Wuji needs to drive a long distance from a first-tier city back to his hometown in a third- and fourth-tier city to visit his parents.
As we all know, you need to concentrate and stay focused while driving, and you can’t tolerate the slightest sloppy. But at this time, you are a bit guilty because you didn’t sleep well the night before.Sleepy, I urgently need a product that can refresh my mind.
When the car drove to the service station on the expressway, the ad slogan “sleepy, tired and drink xx” on the shelf attracted you for the first time. Considering the lack of coffee drinking habits, functional drinks are now Has become the first choice.
In fact, looking at the entire Chinese market, from high-end supermarkets in first-tier cities to small shops in township markets, you can see functional drinks in every corner, and Red Bull placed in the trunks of countless vehicles is also a Chinese feature. A microcosm of the development of sex drinks.
It should be noted that, according to the strict regulations on functional beverages implemented in the 2016 “General Principles of Beverages”, these include sports drinks, energy drinks, nutrient drinks, electrolyte drinks and many other categories. Functional beverages in this article mainly refer to energy beverages, that is, beverage products that contain a certain amount of energy and add appropriate nutrients or other specific ingredients, which can supplement energy for the body or accelerate energy release and absorption. Its popularity is inseparable from the “pioneer” Chinese Red Bull.
In 1995, when the domestic beverage industry had just started, the knowledge of functional beverages was almost zero. China Red Bull’s operating company Reignwood Group and founder Yan Bin did a lot of work.
Landing on the Spring Festival Gala, spending huge amounts of publicity, besides the advertisement, Yan Bin also put forward the slogan “there is no blind spot in the market, you must enter every store”. Red Bull employees ride bicycles to shop, and even take the initiative to rent them out on Chang’an Street. The driver of the car sent Red Bull. Based on this, China Red Bull has greatly increased its market share, and at the same time it has indirectly “ignited” the entire functional beverage market.
According to Euromonitor International’s calculations, my country’s energy drink sales have increased from 23.493 billion yuan in 2014 to 44.778 billion yuan in 2020, with a compound annual growth rate of 11.35%, ranking No. 1 in the soft drink industry sub-track Second, in 2020, energy drinks accounted for 7.8% of my country’s total beverage sales.
More importantly, according to the prospectus of Dongpeng Beverage, the gross profit margin of its energy beverage business, namely Dongpeng Special Drink, is maintained at around 49%. From this point onward, Red Bull’s high-end canned products are pushed back, and the gross margin may be possible. higher. It is precisely because the segmented beverage market with high growth rate, high gross profit, and low threshold is also attracting the interest of other players.
In the energy drink segment, in 2012, Wahaha, which abandoned activation, launched a new functional drink brand, Qili; in 2013, Dali Foods launched Lehu; in 2014, it wasThe “Magic Claw” acquired by Coca-Cola entered China; in 2017, Reignwood launched the “War Horse”; in 2018, Yili launched the “Wake Source”…
After years of scuffles, the domestic energy drink industry currently presents a competitive landscape of “one super, many strong”.
According to Euromonitor International’s statistics, In 2019, there were 6 brands with a market share of more than 1% in the domestic energy drink industry, namely Red Bull (57%), Dongpeng Special Drink (15%), and Le Tiger (10%), physical energy (6%), XS (5%), war horse (4%).
Among them, Dongpeng Special Drinks Market ranks second, second only to Red Bull.
From this point of view, with the fierce competition in the industry and the parallel of old and new forces, the functional beverage market is full of variables. IPO’s Dongpeng Beverage has taken the lead in grabbing the energy drink cake.
“Red Bull Flavor” Dongpeng Special Drink
In external reports, Lin Muqin is the “father of Dongpeng” who successfully put a small state-owned factory on the verge of bankruptcy into the second position of functional beverages, but in fact, this detailed process is not well known. know.
Dongpeng Beverage was founded in 1987. As a long-established beverage manufacturer in Shenzhen, it was restructured and developed from a state-owned enterprise. At first, it mainly produced Tetra Pak soy milk and refreshing series beverages. At the beginning of the new century, because it could not keep up with the pace of the market, it was already on the verge of bankruptcy.
The turning point occurred in September 2003 when Dongpeng Beverage Group decided to transition from nationalization to privatization.
At that time, the French Danone Group began to enter the Chinese market. Its first product after taking ownership of Robust, Pulse, has harvested a large wave of sales with vitamins and minerals as its selling points. The popularity of the pulse has made many beverage companies believe that the functional beverage market is a gold mine. At this time, Lin Muqin, the director of the Reignwood Red Bull foundry, decided to go it alone and took over Dongpeng with his brother.
Objectively speaking, Red Bull, which has been deeply cultivated in China for many years, has gradually occupied the minds of users, and the brand effect it has triggered is huge and far-reaching. If in the field of Chinese functional drinks, Red Bull is crossing the river by feeling the stones, then other brands are crossing the river by feeling the Red Bull.
In order to avoid detours, almost all functional beverage companies that enter the game later adopt the “follower strategy”, In short, it is the copycat Red Bull.This can also explain why the functional drinks on the market are more or less close to the “Red Bull” in terms of flavor.
But in it, there is also the “secret” why Dongpeng can become the second in the industry-copy Red Bull as much as possible.
Because he is familiar with Red Bull’s raw material procurement, technology development, product production, channel sales and other links, Lin Muqin has put Dongpeng Special Drinks into production as the group’s main product since 2007, opening the way to fully imitate Red Bull.
In 2009, Dongpeng Special Drink launched PET bottles in plastic bottles. The product formula and packaging color are almost exactly the same as Red Bull. Even in the slogan, China Red Bull abandoned the slogan “Drink Red Bull when you are thirsty,” When I was sleepy or tired, I wanted to drink Red Bull.” Dongpeng drinks were picked up and replaced with “Red Bull” with “Dongpeng Special Drink”. It became “You must wake up and fight when you are tired! Drink Dongpeng when you are tired.” Pente Drink”.
The difference is that in the era when functional drinks were just emerging, the price of Red Bull in China was 6 yuan/can and 144 yuan/carton, which was equivalent to a week’s wages of ordinary working-class workers. In the early days, Red Bull chose drivers as well. Out of consideration for this high-net-worth group.
Lin Muqin mentioned last year that when he entered energy drinks in 2009, there have been leading brands in the market. How to break through fierce competition, fight differentiated competition, and survive and grow is what he must face.
In order to avoid direct competition with Red Bull, Dongpeng replaced China Red Bull’s metal can body with a PET bottle with a dust cap. The price is only 3.5 yuan per bottle, Buy one get one free and other marketing campaigns that focus on cost-effectiveness have attracted a large number of drivers, blue-collar workers, couriers, and medical workers.
Take Dongguan, the first market for Dongpeng Beverage to be promoted, as an example. The launch of Dongpeng Special Drink sold 20,000 boxes in one year. In 2012, Dongguan’s sales exceeded 100 million yuan and became Dongpeng Special Drink. Model market in third- and fourth-tier cities.
Since 2013, Dongpeng, who has made money, has deliberately focused on brand marketing, not only asking Nicholas Tse to endorse it, but also increasing its exposure on various public media platforms. It is worth mentioning that the “Band-Aid” advertisements with dialogues related to the plot are implanted in the current film and television dramas, and Dongpeng is the earliest initiator.
The crazy betting at the marketing level has also brought Dongpeng into a period of rapid development. The number of people drinking exceeded 900 million in that year. In 2017, “Dongpeng Special”Drink” launched the golden can product, with annual sales exceeding 4 billion yuan. In 2018, the annual sales of “Dongpeng Special Drink” reached 5 billion yuan, and its performance was further improved.
Even so, even if Dongpeng tried to catch up with Red Bull, which has not yet planned to go public, the continuous refreshing performance still seems to be unable to conceal the “Red Bull taste” of the whole body, and cannot get rid of the “cottage” and “high imitation”. “The negative label Dongpeng also raises another question:
Can the listing of “the second in the millennium” Dongpeng really shake Red Bull’s unique position in the arena?
Can strength support erectile ambition?
Before answering this question, you might as well answer another question first. How much growth potential does Dongpeng have in the future after listing?
According to the prospectus, From 2018 to 2020, Dongpeng Beverage’s revenue will be 3.037 billion yuan, 4.209 billion yuan, and 4.959 billion yuan, respectively. Energy drinks, as the leading product of Dongpeng Beverage, contribute 2.885 billion yuan in revenue. Yuan, 4.003 billion yuan and 4.655 billion yuan, accounting for 94.99%, 95.11% and 93.88% of Dongpeng Beverage’s total revenue, accounting for more than 90% of revenue.
Behind Liangli’s revenue is over-reliance on single products. Dongpeng Beverages is not unaware of this. In fact, in order to solve this problem, Dongpeng has also successively launched products such as Chen Pit Drink and Youkan Lemon Tea. However, the overall sales scale is less than 5%, and the market response has been mediocre.
At the same time, from the perspective of the scope of the market, as it has been deliberately avoiding Red Bull, this has directly led to Dongpeng’s situation of “strong south and weak north”. According to data from the prospectus, the Guangdong region accounted for 61.10%, 60.12% and 55.74% of the main business revenue from 2018 to 2020.
Based on this, in the past two months, Dongpeng has successively recruited Wu Xinghai, the former promotion director of Jiaduobao, and Lu Yifu, who has “contributed to the development of Xiangpiaopiao’s northern market,” one of them served as the national promotion director. One serves as the vice president of the company.
From this point of view, the professional managers hired by Dongpeng have two major characteristics: one is from Jiaduobao, and the other is familiar with the northern market. Behind this is the two core demands of Dongpeng: one is to strengthen canned products; the other is to expand the northern market.
On the surface, Dongpeng, who has won the “first share of functional beverages”, has continuously injected fresh blood and sent a signal to the market to take off. However, after further investigation, Caijing Wuji believes that this approach has the meaning of “treating the head for headaches and treating the feet for aches and pains”, and its future effects have yet to be verified.
As the most successful follower of the early Red Bull, Dongpeng’s biggest short rib is also the word “high imitation Red Bull” on his body. How to get rid of this label is actually the biggest problem for Dongpeng now. , Obviously, Dongpeng force used the wrongUp the direction.
From the perspective of research and development expenses, from 2017 to June 2020, the company’s research and development expenses were 22 million yuan, 22 million yuan, 28 million yuan, and 15 million yuan, accounting for 0.76%, 0.72%, and 0.67 of current operating income. %, 0.62%.
In the same period, Dongpeng Beverage’s promotional expenses were 437 million yuan, 543 million yuan, 430 million yuan, and 159 million yuan, accounting for 52.92%, 56%, 43.74%, and 35.2% of the total revenue for the period, respectively.
In fact, Dongpeng, who is light on R&D and heavy marketing, has suffered once. The canned product launched in 2017 was initially priced at 6 yuan. The goal at the time was to compete head-on with Red Bull.
However, when consumers and distributors saw Dongpeng Special Drink’s canned products, they immediately sighed: “This is too Red Bull.” The final result is that one year after the launch of the Golden Can product, Dongpeng Pengteyin took the initiative to cut prices and returned to the range of 3.5-4 yuan, which indicates the failure of Dongpeng’s high-endization and higher gross profit margins.
For a company, the most important things about a product are three points: product power, brand power, and channel power. From the perspective of various actions, Dongpeng, who is used to shortcuts, prefers the latter two. The allocation and use of the 1.49 billion yuan of funds raised in this listing also proves this point.
It is true that China’s Red Bull trademark dispute that has lasted for several years is giving Dongpeng Beverage a chance. Now that it is hitting the market, it can be seen that Dongpeng Beverage wants to use the capital market to speed up financing as soon as possible and complete the expansion of national base production capacity and channels. “Take advantage of your illness to kill you.” Dongpeng can take the opportunity to constantly grab Red Bull’s market, which is why the capital market gives such a high valuation.
But it’s easy to be overlooked that Red Bull’s sales in 2016 exceeded 20 billion, which is four times that of Dongpeng. What’s more, in addition to Red Bull, players in the functional beverage market are still on the field. Channel’s war horse and other competitors;
From an industry perspective, although functional beverages have achieved a compound growth rate of 17.1% in the past ten years, their growth in the past three years has gradually narrowed. With the current low-sugar and healthy life becoming the mainstream, the functional beverage market has grown in scale. Narrowed, the ceiling peaked.
So no matter from the internal or external conditions, Dongpeng, who is not in a optimistic position, is possible to narrow the gap between Red Bull and Red Bull when he is dozing, but in the long runIt seems that overtaking in a curve is not so easy.