The ridiculous acquisition of Coca-Cola’s “Carrying the Sword” was rescued by the anti-monopoly law and Chinese netizens.
Editor’s note: This article is from the WeChat public account Snowball Network, the author’s overtime accounting.
The Ministry of Commerce announced on March 18, 2009 that Coca-Cola’s acquisition of Huiyuan Juice did not pass the anti-monopoly investigation and decided to ban the concentration of this operator, because the acquisition will affect or limit competition, which is not conducive to the healthy development of China’s juice industry. This is the first unsuccessful case since the implementation of the anti-monopoly law. At this point, Coca-Cola’s absurd acquisition of “Carrying the Sword” was rescued by the anti-monopoly law and Chinese netizens.
This article starts from the perspective of economic logic of fruit and vegetable consumption and order farming, and tells two negative cases—Coca-Cola’s acquisition of Huiyuan juice and apple juice companies such as Guotou Zhonglu , Andre Juice, Haisheng Juice, etc., combined with the development logic of the two major fruits of apple and citrus in China, use facts to describe the business picture that violates economic logic. Please feel it yourself.
Carrying the boat and seeking the sword—the same data, the same dream
Huiyuan Juice (listed in 2007), SDIC Zhonglu (2004), Andre Juice (2003), Haisheng Juice (2005) and other prospectuses have similar paragraphs: “China’s per capita The annual consumption of fruit juice is less than 1 liter. Compared with the per capita annual consumption of 20 liters in developed countries, there is a very big gap. China with a population of 1.3 billion will become a huge market for fruit and vegetable juice consumption.”
The above is their dream together with Coca-Cola. After more than ten years, the dream is still waving in the distance, never approaching, see Figure 1. National Bureau of Statistics data: China’s 2007 and 2018 juice and juice beverage production was 10.79 million tons and 15.89 million tons respectively.
Today, we can be sure that “Coca-Cola” has been dreaming. What is the reason for the difference in juice consumption between China and developed countries? Let’s talk about the economic logic of fresh fruit and vegetable consumption.
Economic logic of fruit and vegetable consumption
China is the world’s largest producer of fruits and vegetables. In 2017, fruit production was 265 million tons, 10 times that of the United States.The annual output of vegetables is 557 million tons, which is 17 times that of the United States. See Table 1. The per capita consumption of fruits and vegetables in China far exceeds that of the United States. Is it that the American people are too poor to eat fresh fruits and vegetables?
The fruit and vegetable is a commodity with a short shelf life, which means that the time available for sale is short; the high water content means that there is a freight constraint, and the market coverage is limited in space; the fruit and vegetable product is imagined as a bottle with a very long shelf life. Short water-containing juices, The two limitations are limited in space and time to the scale of production and marketing of fruits and vegetables in the unit area. The smaller the scale, the higher the production cost.
Supply creates demand. If the supply cost is too high, the consumer group will decrease, and vice versa. Therefore, the unprecedented advantage of China’s population density and total volume has created an unparalleled scale of fruit and vegetable market and low enough production cost. Make most fruits and vegetables fresh.
Therefore, the answer is indeed that the United States is very sparsely populated, causing it to be unable to eat fresh fruits and vegetables. But it also requires the intake of vitamins and other nutrients, so choose a fruit and vegetable product with a long shelf life after processing, and finally It has become a high amount of fruit juice consumed by Americans and more vitamin tablets. In the same way, the cost of animal protein production in the United States is low, so Americans eat more meat and eat fewer fruits and vegetables. The fat people in the United States naturally have more.
In summary, this is the economic logic of fruit and vegetable consumption. No matter how good a cup of NFC or 100% juice, it can’t beat a fresh red Fuji apple or orange. “Coca-Cola” has a dream that cannot be realized, and violates the economic logic without knowing it. The business performance of Huiyuan Juice after its listing is a mess (see Figure 4).
The domestic juice market is not playing, and developed countries in Europe and America do need to drink juice. Does the company that exports concentrated apple juice have a future? Let’s talk about the market choice of fruit varieties.
Three, market selection of fruit varieties
See Figure 2. Since 2003, China’s fruit growth mainly comes from apples and citrus, because the shelf life is long, can compare watermelon, pear, grape, banana, peach, apricot, etc. Wait. Fruit has the characteristics of “seasonal production and annual sales”. The long shelf life is the key factor to ensure the annual supply. In the northern winter, a box of apples can be stored for half a year outside the window. Apples are the best in storability and become the first in watermelon. Big fruit.
Because apple trees are not heat-resistant and citrus trees are not cold-tolerant, the main producing provinces of the two fruits are bounded by the Yangtze River, northern apples and southern citrus. Due to the long shelf life, the market for fresh fruit in an unprecedented scale has chosen apples and citrus. Similarly, it has created favorable conditions for the increase in production quality. See Table 2, and the production efficiency of apples and citrus has been increasing to this day. .
In the apple, you can also see the evolution of the breed of pigs that have been removed from the pigs. In 1980, the Ministry of Agriculture introduced Fuji varieties in batches. After 8 years of domestic trials, it was promoted to the whole country. Red Fuji has early results and high yield. The fruits are large, high quality, resistant to storage and transportation, and can be stored at room temperature from May to June. Once launched, it quickly replaced local varieties such as Guoguang, Qinghong Banana and Jinshuai.
So careful, the business of the sugar orange selected by the father of the time, the late ripening (less competition), high sugar and low acid (fresh food), long shelf life (large scale of production and sales), high price of oranges (solving freight problems), business intuition Amazing.
尴尬 Raw material dilemma
Return to the topic, as the name suggests, apple juice is apple juice. In 2017, China’s apple production is close to 50% of the world. It is reasonable to say that there is no shortage of raw materials. The biggest problem in the industry is the shortage of raw materials.
(1) Raw material reduction and degradation
The cultivation of apples in China is mainly based on fresh food, that is, the output of fresh apples is the highest in the same land. The cultivation of juices is not cost-effective. Most of the processed raw materials are mainly the fruits and fruits of fresh apples. In addition, fresh apple malic acid is very low, so the export price is lower, because the export of apple juice is mainly used to mix other juices, so the acidity requirements are very high, high acid and high price, the acid content increases by 0.5%, the price per ton About 1,000 yuan.
China is a big apple apple country. Under the guidance of consumption upgrading, fruit farmers have been working on the increase of apple quality (discussed above). What is wrong is that the quality upgrade means that the yield per unit area is reduced. The acidity is reduced, and the acquisition of raw materials is contrary to the development of the apple industry.
In order to maintain the scale of production and sales, more defective fruits must be purchased, and the scope of procurement needs to be expanded.The farther distance means higher freight rates. Under the economic logic of Apple’s upgrade, the cost of raw materials is rising, and then a vicious circle.
As shown in Figure 3, since 2008, apple production has risen year after year, and the export volume of apple juice has stopped, even showing a downward trend. The operating rate of the whole industry has dropped, which is sufficient to support the above judgment.
(2) Dying and ordering agriculture
Industry people are also very aware of the material difficulties, but they can’t self-sell squid. They must be self-help. SDIC Zhonglu disclosed that it took the lead in building a high-acid apple base in China. It has built 0.5 million mu in Rushan, IPO. The raised funds of 190 million yuan will be used to build a 52,000-mu high-acid apple base in Shanxi. Together with the original source of high-acid apples, more than 50% of the company’s total products can meet high acid requirements.
Imagination is always beautiful. Does this self-built raw material and the self-built glutinous rice base of Dong’e Ejiao and the self-built sugarcane base of Nanning Sugar Industry seem to have met each other? Against the economic logic, the more you do, the faster you die.
At the end of the day, the same land can be planted with high-acid apples, and naturally it can also grow red Fuji. If the company can’t get a high enough purchase price, so that the farmers’ income exceeds the fresh red Fuji, then the farmers can’t be motivated. It is all in vain.
Similarly, with the popularization of automobiles and agricultural machinery, 驴 is gradually replaced as an animal power tool. Dong’e Ejiao tries every means to solve the material dilemma, but the output of any part is subject to competition from pigs, cattle and sheep. It is difficult to sell high prices outside the suede, the comprehensive income of farming is low, and the stocks continue to decline.
See Figure 4. “Coca-Cola” violates economic logic at its own cost.
(3) More tragic citrus juice
Like apples, China’s citrus is mainly fresh food, mainly wide-skin citrus (the peel is easy to peel), the proportion of citrus varieties suitable for processing is very low, and the juice can only be made from the residual fruit, but also There is a problem that restricts citrus juice.
Fresh citrus varietiesAfter the juice is squeezed, there will be a “delayed bitterness”, which means that the citrus fruit has no bitter taste when it is freshly eaten. However, it has a bitter taste after being processed by juice, sterilization, etc., mainly caused by bitter substances such as citrate.
Because there is no effect on fresh food, the market has no incentive to improve citrus varieties (reduced bitter substances), and the extra cost is “depleted” and it is not worth the loss. Therefore, the domestic orange juice production is very small, and most of the orange juice needs to be imported.
Conclusion
Before you know the three days, you will be rich for thousands of years.
This article is from Snowball. Snowball is the leading investment exchange trading platform.