Image source @ Tianfu Coke Official Micro
Wen 丨 BBB Institute, author 丨 Li Xiaowei
So far, no chinese local beverage has been able to match the former Jianlibao. Born in 1984, this carbonated beverage firmly occupied China's urban and rural markets in the following decade, and set off a wave of entrepreneurial waves of Chinese food and beverage enterprises.
As far as this nationality is concerned, the myth written by the "Oriental Magic Water" is not even comparable to that of the international beverage giants Coca-Cola and Pepsi. But the giants are by no means idle. Liangle once flooded the Seventh Army, the whole line destroyed the seven major Chinese state-owned soda factories, and the old soda was either acquired or hidden in the snow or lost the opportunity, and it was difficult to regain the glory of the market.
With the policy-oriented wave of mergers in the 1990s, Chinese companies did benefit from the mature management experience and brand model of European and American companies, but they could not really become strong. In the two decades (1990-2010) when consumers' material demand has been rapidly expanding, it is difficult for domestic brands to match overseas brands.
The market is swallowed up not in an instant, it is the result of long-term development. But fortunately, in the past two decades, China's manufacturing has been able to build today's digital and intelligent advanced production lines, and the conception, landing and maintenance of the brand are also slowly on the right track, in order to break out such a hundred flowers blooming situation.
Counting from the day the "Two Pleasures" entered the customs, the history of The development of Chinese beverages has been turbulent for 40 years. Looking back at several famous Chinese and foreign beverage wars, we can not only see the struggle and persistence of national brands, but also see the giants' unremitting sniping at local enterprises. We tried to go back to one of the worst defeats and divide it into 4 stages to retrace the story of these forty years.
The Two Pleasures flooded the Seventh Army and retreated
When the Oriental Magic Water is killed
The time for Coke in China has not yet arrived
The drink war is back
01, liangle flooded the seventh army retreated
This is the first lesson that foreign companies teach to local enterprises.
In the 1990s, under the guidance and encouragement of policies such as opening up to the outside world and exchanging markets for technology, some local enterprises followed the wave of joint ventures with foreign capital. This wave of cooperation rushed from the cosmetics industry all the way to the food and beverage industry, and then extended to the 3C field of home appliances.
The story of the "Seven Armies flooded with two pleasures" takes place here. The two international giants ate seven of the eight old state-owned carbonated beverage manufacturers. The eight soda plants, including Chongqing Tianfu Cola, Guangzhou Asian Soda, Beijing Arctic Ocean, Shandong Laoshan Cola, Henan Shaolin Cola, Shanghai Zhengguanghe, Shenyang Bawangsi and Tianjin Shanhaiguan, accounted for 42% of the country's total sales in 1983.
(Geographical map of China's soda, image source: Qyyou.com)
According to Zhao Xinli, Huang Shengmin and Zhang Chi in "Forty Years of Chinese Brands (1979-2019)"[1], before Liangle "entered the customs", the former Ministry of Light Industry was worried that once the market was liberalized, domestic beverages might collapse, so it designated eight major factories to cooperate with international beverage giants.
Tianfu Coke, which started in Chengdu, Sichuan, deserves a strong stroke. It was The first domestic Coke in China in the true sense of the word, and at that time, "two music" looked at it. At its peak, Tianfu Cola built 108 associated factories throughout China, with annual sales of more than 200,000 tons and profits and taxes of more than 70 million.
In 1991, Coca-Cola began to seek cooperation from Tianfu Cola, and Li Peiquan, then the general manager, "pushed left and right", and Coca-Cola's conditions seemed to be somewhat harsh: the joint venture could only produce Coca-Cola (but agreed to set up another factory to produce Tianfu Cola). Due to the failure to obtain the "Shang Fang Sword", the cooperation was postponed again and again.
PepsiCo seized the opportunity to enter the negotiations. So on January 18, 1994, PepsiCo signed a joint venture agreement with Tianfu Coke and held 60% of the shares. They have gained a lot: one is the associated factories all over the country, and the other is the sales channels covering the whole country.
After the cooperation was reached at that time, the competent authorities limited in the approval document: the production and sales of Tianfu Cola shall not be less than 50% of the total output. The first year of Pepsi did so, but then it began to decrease. By 1996, the production share of Tianfu Cola, a joint venture company under Pepsi Cola Holdings, was less than 25%, far below the "red line" delineated by the approval, and a large number of former Tianfu Coke managers were stripped, and then fell into the situation of annual losses. [2]
(Image source: @Tianfu Coke Official Micro)
Looking from south to north, Tianjin's Shanhaiguan soda is not good. After Coca-Cola and Shanhaiguan Soda Factory jointly established Tianjin Jinmei Beverage Co., Ltd., Jinmei was reluctant to provide ingredients to the township enterprises of the original factory. The factory can only manually deploy production, the quality is naturally uneven, and the reputation and sales volume are also plummeting.
In this wave of joint ventures, Laoshan Cola stopped production in 1997, Wuhan Binjiang brand of the second factory soda stopped production in the millennium, the Arctic Ocean, Asia Shashe was once hidden in the snow, the Eight Kings Temple trademark was sealed for ten years, in addition to Shanghai Zhengguanghe, the eight major soda factory important brands were almost completely destroyed.
Liangle's means of this method only valued the channel advantages of soda factories in various parts of China at that time. In "The Fate of COFCO Before and After Ning Gaoning Landed in Beijing", Wei Sanshui elaborated on Coca-Cola's desire for channels and the strength of building a distribution system.
In the United States, Coca-Cola has the country's largest distribution network, is second only to the postal system distribution system, for a long time, Coca-Cola relies on such a huge system, every day to sell products to more than 200 countries and regions, the daily drinking volume of more than 1 billion cups, equivalent to more than 40 million TEUs of sub-sales, is the world's beverage market 48%.
[3] The original quotation is from Wei Sanshui, "The Fate of COFCO Before and After Ning Gaoning Landed in Beijing", Contemporary China Publishing House, 2006.1
However, the geographically isolated local soda factories have not collapsed completely. Coca-Cola crossed the Shanhaiguan Pass[4] but was cut off at Qinling. The people of Shaanxi are steadfast in their love for "Bingfeng" soda, and the Sanqin package has a name for it.
Of course, in the 1990s, when Liangle was strong, almost no one in the local beverage market could compete with "Liangle" except Jianlibao and Wahaha. Most old soda brands are either joint ventures or acquisitions or shares, and even if they wait until the millennium to regain control, the road to revival is still a long way off.
02, when the Oriental Magic Water is killed
The hour hand was set from the 1990s to another decade, and Jianlibao's market position had been established, and Liangle had not taken advantage of it.
An important reason is that at that time, Jianlibao cleverly walked on the border between functional drinks and carbonated drinks, you can say that it is orange soda, you can also say that it is a sports drink - athletes drink this orange-yellow liquid, can quickly recover their strength. Ouyang Xiao, a researcher at the Guangzhou Sports Science Research Institute, developed it and was targeted by Li Jingwei, then director of the Sanshui Distillery in Sanshui County, Guangdong Province.
Before becoming the director of the distillery, Li Jingwei was the deputy director of the Sanshui County Sports Committee. In 1983, he went on a business trip to Guangdong to buy a canned Coca-Cola, and suddenly had the idea of letting the distillery produce drinks.
At that time, China's beverage production line was rudimentary, and the common packaging was the practice of recycling glass bottles with aluminum caps. In 1984, there was no completely local R&D and manufacturing can manufacturer in China[5], and Sanshui Distillery was even less likely to have such a production line. But Li Jingwei magically said that he moved the Shenzhen Pepsi Cola Company to work for him.
Perhaps at that time, all kinds of Cokes were frequently on the market, and PepsiCo did not regard Jianlibao as an opponent. At the 1984 AFC Guangzhou Olympics and los Angeles, Jianlibao became famous in one fell swoop. Sales that year exceeded 3.4 million yuan, and at the most critical time, Sanshui County was crowded with large trucks from all over the country to pull goods, and a cart of Leather Jianlibao's batch was fried to 20,000 yuan.
In 1987, at the 6th National Games held in Guangzhou, Jianlibao and Coca-Cola fought for the name of "designated drink" of the conference. Coca-Cola offered 1 million yuan, and Jianlibao directly increased the size to 2.5 million, which was already The largest beverage company in China at that time, and won without suspense.[6]
Coca-Cola and Pepsi finally understood that this was an opponent to be reckoned with. The positive battle between Chinese companies and foreign companies at the National Games this time also allowed Jianlibao to start writing the myth and legend of "Oriental Magic Water".
From 1984 to 1994, in the ten years that Jianlibao dominated the beverage industry, "Two Music" first failed to exert its fists in time due to immature sales channels (it had not yet invested in the eight major factories), and the main soda and cola products of the eight factories seemed to be separated from the "sports functional" Jianlibao, while "Wahaha" mainly attacked pure water and juice, and there was no can production line, which also avoided positive competition.
This is the best era of the Oriental Magic Water Massacre. On its tenth anniversary, Jianlibao announced its foray into the United States, setting up an office in New York and spending $5 million on a one-story office building at the Empire State Building.
People are afraid of being famous Pigs are afraid of being strong. At the time when Jianlibao is reaching its peak, the property rights issue has always been unresolved. In 1997, Jianlibao intended to list in Hong Kong, and the Sanshui Municipal Government refused to approve Li Jingwei's team to enter the shares on the grounds that "there is no Hong Kong temporary residence permit, so it is not allowed to buy H original shares", and the contradictions between the two sides were torn to the surface. The decline of an enterprise eventually leads to a turning point in fate due to institutional and management problems.
03, China Coke time has not arrived
After jianlibao's limelight weakened and the two le flooded the seven armies dominated, domestic beverages were not without recovering their faults, although the area was limited and the time was short.
New entrants draw on some of their experience – the moment a carbonated drink explodes when it enters the mouth, the thrill that always seems to tie it to the passion and roar of sports. Whether it is Coca-Cola or Jianlibao, they have become household names through the National Games. This time, the new entrants were no exception.
On June 10, 1998, the first match of the World Cup in France officially kicked off, and the live broadcast of the central station was about to begin.
In the seconds when the broadcast entered the countdown, the advertising slogan of "very coke, very selective" took the lead, which marked the official debut of "Chinese their own coke" that Zong Qinghou was looking forward to.
From 380,000 tons of sales in the extraordinary series in 1998 to 620,000 tons in 2001, accounting for about 12% of the national carbonated beverage market, although it failed to beat Coca-Cola, it has become increasingly equal to Pepsi Cola in a single item.
An important reason for the initial victory of very cola is to preemptively occupy second- and third-tier cities and rural areas. Zong Qinghou's confidence in the strategy of "encircling the city by the countryside" is recorded in detail in the book "The Walker". In 1998, China's rural consumer goods retail market expanded rapidly, growing by 10% that year, exceeding the growth rate of the city for the first time, and the entire beverage market in the countryside also rose by 16.9% the previous year. Although Liangle has an absolute occupation in first-tier cities, their tentacles have not yet penetrated into the countryside.
Li Yanjun, vice president of the Research Institute of wahaha food science academy, remembers that in the nutritional solution workshop of the medical insurance company, the concentrate of very cola was successfully extracted after thousands of experiments. The product was then produced in Baili Company in Hangzhou's Xiasha base, and more than 20 employees were transferred from the Hangzhou cannery because of the shortage of people.
Since then, Wahaha, which has gradually established a dominant position in the market through bottled water, has spread the very cola to nearly 80% of the sales channels in the countryside by establishing a supply and marketing consortium and sharing benefits with dealers. The situation is completely open.
During this period, Fenhuang Coke, which was born in the same year as Very Coke, also had a brief limelight. Starting from chaozhou in Guangdong, the base camp, he went to the southwest fire to Sichuan, and used the advertising offensive to eat 8% of the national beverage market all the way. In its heyday, it squeezed into the top four of Coke, followed by two music and very cola, but Fenhuang Coke, which spent 150 million yuan on TV commercials in 1999, soon broke its cash flow due to a misjudgment, and only lived for 3 years in the market, but as a national brand, jianlibao and very cola were called "two giants, three teenagers" by latecomers.
If the end of the story stays here, Zong Qinghou may be able to clap his hands with Li Jingwei. The myth of oriental magic water is taken over by Chinese's "very cola", which sounds like a good ending. But the old brother couldn't hold back anymore.
In 2002, the Sanshui municipal government transferred 75% of the shares of Jianlibao to Zhejiang SDIC, and Zhang Hai, 28, became the chairman of the group, and Li Jingwei's team was completely out.
Also in this year, Coca-Cola held a dealer communication meeting at the Lanzhou Feitian Hotel. The Gansu branch of COFCO Coca-Cola Co., Ltd. and local distributors communicated in full swing at the meeting, which marked the official advance of the world's largest beverage company with a history of 116 years into the west.
Coca-Cola is good at fighting urban battles, but this does not mean that the shortcomings in the countryside cannot be remedied. The cooperation with COFCO is an excellent opportunity to play to the advantages of the channel. Lanzhou Daily reported on May 23, 2002 that the Gansu branch of COFCO Coca-Cola Co., Ltd., which was established less than half a year ago, used wholesaler network resources, transportation resources and channel resources to spread products to various retail outlets at the fastest speed. This allows consumers to drink Coca-Cola at any time, anywhere.
In the following years, Coca-Cola went all the way into Hunan, into the Great Northwest, deep into Xinjiang, various photo contests, college students' love sponsorship, Hope Primary School donations, consumers formed a "high-end international, social responsibility" image of this overseas brand.
A classic brand positioning issue is revisited here. Coke is originally derived from American culture, very Coke at that time to the rural market, short-term sales can of course go up, but as long as the two music stores the goods to the countryside, local consumers began to have "cottage" questions, the trust in very Coke will naturally waver.
Chinese Coke doesn't seem to be waiting for its own good time.
In the first decade of the twenty-first century, Volkswagen was waiting for high-end, international European and American brands, and their news habits and brand awareness were on the eve of being cultivated. At this time, the whole of China is in a period of rapid consumption growth, and the market needs a large number of players to fill the gap. At that time, Chinese enterprises lacked the overall planning of brand strategy, mature experience in the company's operation, this mighty decade, was attacked by European and American brands, it is also inevitable.
04, the drink war is back
History is a reincarnation, and now there must be a war between Chinese and foreign beverages.
In the 1990s, when the media reported on the "Seven Armies of The Two Joys", Chinese consumers were in the initial stages of building confidence in domestic products. It just coincides with the climax of foreign investment, multinational companies are bold, and the differences in infrastructure level make domestic brands rarely overwhelmed. Even if the public has the emotional determination to revitalize the national industry, it is difficult for the industrial side to meet expectations in a short period of time, so that the end of the story cannot help but sigh.
After nearly two decades of dormancy, there is a moment when consumers' confidence in domestic products or the accumulation of industrial strength have re-climbed to a high point. Statistics show that since 2018, domestic beverages have gushed out at least more than 10 brands, including Yuanqi Forest, Hankou Second Factory, Bestinme, KellyOne, etc.
(Image source @ Yuanqi Forest Official Micro, there is a cut)
The atmosphere began to be tense, stemming from the "two music" concerned about the newborn opponent. A former Pepsi Executive revealed to 36Kr that "in every important meeting in 2021, Yuanqi Forest will definitely be named".
And before this delicate tension is picked up, the two music seems to have put pressure on the opponent.
According to Yuanqi Forest, between 2018 and 2020, they encountered a number of production and supply interruption incidents, "once the production plan of the foundry is changed, it will lead to a disconnection in the production of Yuanqi Forest's products."
At the most intense time, the foundry called Yuanqi Forest directly, "Before 12 o'clock this evening, all factories producing Yuanqi Forest must stop working." The other party is the foundry of Yuanqi milk tea products, and also an affiliated factory of a large domestic beverage company.
According to sources, the boss of the international beverage giant personally called the foundry and demanded that its foundry immediately stop cooperating with Yuanqi Forest, and the tone was even at all costs, "no matter how much damage is caused, it must also stop production".
Not only the foundry, but also the shortage of key raw materials has also put Yuanqi Forest into a "shortage" dilemma. Although the sugar-free track has long existed, it is indeed a yuanqi forest that makes the market, and one of the key raw materials is "erythritol".
Previously, the supplier of erythritol was Shandong Bowling Baobao. The company's output on erythritol in 2020 is about 20,000 tons, and the Yuanqi Forest has eaten most of it, which is supposed to have come and gone, the price is appropriate, and the relationship should be very harmonious.
But Bowling Has a special status, he is Coca-Cola's first fructose supplier in China, and once the only supplier of Coca-Cola's Chinese fructose syrup.
In 2008, the media reported that the headline was "Bowling Treasure: Hop on the Ship of Coca-Cola, Sweet Make 2.2 Billion Yuan in 12 Years",[11] and hinted that founder Liu Zongli was only one step away from his dream of going public after taking a ride on Coca-Cola. Sure enough, the company went public the following year. By 2015, Bowling Waslet had won the Coca-Cola Top 10 Supplier Award. The two sides are closely linked to the treaty.
Therefore, when the sugar-free sparkling water market was supported by the Yuanqi Forest, the giants decided to sell.
The media late Later Post contacted a person familiar with the erythritol supply chain, who revealed that Coca-Cola and Pepsi Cola have successively found Bowling Treasure to order this raw material around the Spring Festival in 2021, indicating that the formula is already in hand and is waiting for the opportunity to sell [12].
Around March 2021, Coca-Cola and PepsiCo's sparkling water brands AHA and Bubly launched 0-sugar drinks, respectively. When Coca-Cola begins to search for sugar substitutes, Bowling Is destined to be drawn into the war and may be forced to take sides.
It is not uncommon for suppliers to give priority to large customers, and large orders are the way to support the survival of enterprises. Even if it is cross-field, Tesla's bicycle production cannot keep up when it starts, because foundries must give priority to meeting the orders of traditional car companies.
However, an interesting discovery was that when the Yuanqi Forest was in a mess, the "Oriental Magic Water" Jianlibao actually helped him. On the label of a citrus-flavored sparkling water in Yuanqi Forest, the entrusted party is "Beijing Guangdong Jianlibao Beverage Co., Ltd."
Counting the past 3 years, from raw material erythritol to filling and preforms on the production line, cutting-edge domestic brands have encountered heavy clamps, and each step is very difficult. After Tang Binsen was cut off from supply and production in Yuanqi Forest again, he personally flew to the foundry to negotiate, and after returning to Beijing, he directly sent a message to the executive group -
"We want to build our own factories."
The iron curtain of the supply chain of international giants has finally been pried open in the all-out efforts of cutting-edge brands. In July 2019, Yuanqi Forest signed the contract for the first self-built factory in Chuzhou, Anhui Province. There are not only sweetener suppliers such as Jinhe Industry, but also beverage brands such as Dongpeng, and supporting enterprises such as Jiamei Irrigation and Tenghui Packaging to form an industrial chain agglomeration advantage.
Yuanqi Forest has made a good start for the cutting-edge beverage brand. Just like Jianlibao inspired the first wave of Chinese beverage entrepreneurship in that year, New brands such as Bestinme and Guozi Ripe have successively entered the sparkling water market; new tea head brands Xicha and Naixue's tea have also begun to enter the bottled soda market; veteran players Nongfu Shanquan and Wahaha have never lagged behind, and even dairy enterprises Yili have come to share a piece of the pie.
More importantly, domestic soda brands have begun to reorganize Heshan.
In 2002, after the Difficult Negotiations between the Chinese side and PepsiCo, the Asian soda brand including the factory area was taken back by the Guangzhou Municipal Light Industry Bureau,[13] and after Xiangxue Pharmaceutical acquired the brand, Asia Shashe finally woke up and had its own Tmall flagship store in 2019; although Wuhan Binjiang Soda could not return in the hands of Coca-Cola, the young team started the reputation of "Hankou No. 2 Factory" for soda.
As for Tianfu Coke, which originally cooperated with PepsiCo, the original general manager Li Pei was over seventy years old, but he personally went from Chongqing to Shanghai to submit a letter of negotiation at Pepsi's China headquarters. Tianfu Coke eventually regained its formula and trademark after 2010, and a big war at least had a stage of results.
In the old photo album of Tianfu Coke, there is such a photo, a little girl with a small red flower, holding a Tianfu Coke that has been drunk for more than half of it. In Tianfu Coke's latest Weibo, they said they hoped to find the girl.
(Picture source @ Tianfu Coke Official Micro)
Notes and References:
[1] Zhao Xinli, Huang Shengmin, Zhang Chi, "Forty Years of Chinese Brands (1979-2019)", Social Sciences Academic Press, 2019.5
[2] Li Tong, "The Last Tianfu Cola", Business China Business Review, No. 3, 2009
[3] The original quotation is from Wei Sanshui, "The Fate of COFCO Before and After Ning Gaoning's Airborne Landing in Beijing", Contemporary China Publishing House, 2006.1
[4] Shanhaiguan is a brand name, not "Shanhaiguan" in the geographical sense.
[5] There may be doubts here that in April 1981, the first Coca-Cola bottling line was put into operation at the Wuli store in Fengtai District, Beijing, which was the first Coca-Cola bottling plant after the founding of the People's Republic of China, but this was not completely independent research and development, so it was not included.
[6] Wu Xiaobo, "The Great Defeat (Revised Edition)", Zhejiang University Press, 2013.11
[7] Wu Xiaobo, "Forty Years of Turbulence: National Enterprises 1978-2018", CITIC Publishing House, 2017.12
[8] Wu Aiqi, "Zong Qinghou: The Du Walker", China Machine Press, 2018.11
[9] The two giants are Coke and Pepsi.
[10] Peng Qian, Qiao Qian, and Yang Xuan, "2021 Beverage Wars: Giants Encircle and Suppress yuanqi forest", 36Kr, 2021.9
[11] Cui Xinshuang, "Bowling Treasure: Hopping on the Boat of Coca-Cola, SweetLy Making 2.2 Billion Rich in 12 Years", Financial Weekly, 2008.8
[12] Zhu Kailin, "Yuanqi Forest, Growing Up In a Year", Late Post, 2021.12
[13] Hu Zhiyi and Zhou Meiyan, "The Joy and Sorrow of Domestic Coke: Survival in the Cracks under the Hegemony of Two Musics", Times Weekly, 2013.9