The collapsed moat.
Editor’s note: This article is from the WeChat public account “New Retail Business Review” (ID: xinlingshou1001).
Author: Fan Peng, investor, author of “New retail: retail revolution sounded the horn Fourth,” a book. Yu Jie, investment director of private equity funds.
“Business operations must not only enhance transaction value, but also reduce transaction costs.”
After 22 months of trading suspension, Huiyuan Juice finally failed to fulfill the conditions for resumption of trading, and its listing status was cancelled by the Hong Kong Stock Exchange on February 14, 2020.
In addition, Huiyuan’s 2017 annual report, 2018 annual report and 2019 interim report have also been delayed. Today, the company’s total market value is fixed at HK$5.397 billion at the time of trading suspension, which is HK$12.1 billion from its historical peak.
“Huiyuan is called the New Year”, the former national brand representative is now less and less common on the supermarket shelves. Founder Zhu Xinli was restricted from spending four times, debts tens of billions, and senior executives resigned. Huiyuan’s former glory is long gone.
Why did Huiyuan Juice, the “national beverage” that has been remembered by a generation, come to such a miserable state in the commercial tide of not advancing or retreating?
01 The still strong outer moat
In fact, in the minds of consumers, the Huiyuan brand has not really collapsed. In recent years, although the company’s operating income has slowed down, it has not been substantially affected.
According to AC Nielsen data, in 2018, Huiyuan’s market share of 100% juice and medium-strength juice remained the first in the industry. Huiyuan’s brand moat is still quite strong and has always guarded the company’s fortress.
As early as 1996, Huiyuan spent a sky-high price on the 5-second advertising rights of CCTV’s “News Broadcast” in 1997.
In that era when the Internet was still in its infancy, Huiyuan endorsed its products through CCTV, and its products sold nationwide, and immediately set up factories in various places, entering a period of rapid development and becoming the leader in the juice beverage industry.
According to public reports, the company achieved revenue of 1.2 billion yuan in 2000, ranking first in the domestic juice industry with a 23% market share. In 2001 and 2002, Huiyuan’s revenue was 1.54 billion yuan and 2.23 billion yuan, profits reached 250 million yuan and 270 million yuan, and its market share jumped to nearly 30%. It can be seen that Huiyuan has broadened and expanded the brand moat.
In September 2008, Coca-Cola announced the full acquisition of Huiyuan for HK$17.92 billion. This was the largest acquisition by Coca-Cola in China and even the company’s history.