Image source @ Visual China
Text | Zinc Finance, author | Hu Yutong, Editor | gale
Whether it can be on the "big stage" of Chinese New Year's Eve meals has become the most intuitive way to verify the national popularity of beverage brands.
This year's Spring Festival, sparkling water, milk tea and other youthful and energetic new drinks are beginning to emerge, and the veteran Coke Sprite carbonated soda and juice are still the classic must-haves for most consumers.
Zong Qinghou, the founder of Wahaha, once said: The beverage industry is not outdated, and it will always be a sunrise industry. According to CICC Qixin, the average annual compound growth rate of China's soft drink market can maintain 5.94% from 2019 to 2024, and the total market size is expected to reach 1.3 trillion yuan in 2024. The 100 billion level is moving to the trillion level, the huge market is destined to attract more participants, and the battle between soldiers and families will be won or lost.
In the past year, the beverage industry has witnessed the polarization of "peers with different lives". Huiyuan Juice, which was once a household name, declared bankruptcy and reorganization, with debts accumulating more than 11.4 billion yuan, and the current situation of the 30-year-old brand is lamentable; the "dark horse" Yuanqi Forest, with sparkling water, milk tea and other zero-calorie sugar concept drinks ,"killed" out of the siege, wildly won the first place in the beverage category of many e-commerce platforms.
There are those that are closing, those who are head-on, and those that are enduring, and this silent war has been going on. Now, when catching up with the replacement of corporate successors, what new variables will occur in Chinese beverage companies.
The two "le" dominate, and China's soda is tragically encircled and suppressed
Someone asked a question on Zhihu: Why has Coke not increased its price for so many years?
This is jointly determined by the duopoly situation, in order to prevent the possibility of the rise of niche brands, it is taking the route of small profits and large sales. And these two major oligarchs are "old friends" Coca-Cola and Pepsi.
In 1978, after nearly three decades, Coca-Cola re-entered China and began to stir up the domestic beverage market. Its old rival, Pepsi Cola, followed suit, opening its first bottling factory in Shenzhen in 1981.
At that time, the domestic carbonated beverage brands accounted for the majority of the eight sodas of The Arctic Ocean, Shanhaiguan, Zhengguanghe, Asia, Bawangsi, Tianfu Cola, Laoshan Cola and Shaolin Cola. In 1983, these eight soda plants accounted for 42% of the country's sales.
As Coca-Cola begins to emerge in major cities, another "oriental magic water" is being conceived. Li Jingwei, director of a distillery in Sanshui County, Guangzhou, was inspired by Coca-Cola, and at that time, China was in the midst of a health product boom, so he thought of making a functional drink specially prepared for athletes, and Jianlibao was born.
With the 1984 Olympic Games, Jianlibao made its first appearance on the international stage, because it was stained with the light of the women's volleyball team's 3 consecutive years, and its main fitness function was in the hearts of consumers. A year later, Jianlibao's sales directly increased by more than four times, reaching 130 million yuan in two years, and the development process of this bottle of "Oriental Magic Water" is as magical as the name.
Unlike Jianlibao, the local soda factory is facing a completely different situation, except for Shaolin Coke, none of the seven heroes have been spared from being surrounded and suppressed by the "two music".
The first to bear the brunt was Arctic Ocean soda, which was put together by PepsiCo due to its lack of early experience in business cooperation. In the 15-year cooperation agreement between the two parties, the Arctic Ocean lacked a voice in the joint venture because the proportion of investment was lower than that of PepsiCo. The Arctic Ocean is only allowed to produce pure water, and the other production lines are all used to produce Pepsi's Qixi and Mei Nianda.
"Two Music" is like the use of joint venture companies to suppress Qixiong one by one, domestic sodas are hidden one by one, and these local soda factories in the 90s are conducive to the gradual fading of the Chinese market.
The two giants of the carbonated soda market are pressed, but Jianlibao can be in it, which also provides new ideas for domestic beverages. If you can't make soda, it's better to make other drinks in a different way. Wahaha, Nongfu Spring, Huiyuan, unified as the representative of a variety of beverages began to appear on the market, functional drinks, tea drinks, juices and other subdivision tracks gradually increased, soda dominate the drinks of the day has passed.
The era of the herds
In the decade when Jianlibao was in the limelight, even Coca-Cola was difficult to reach. In 1987, in the process of competing for the title of drink designated by the sixth National Games, Jianlibao won the game without suspense with an opening price of 2.5 million. With the rise of jianlibao, the light of national beverages, the domestic beverage market has also entered the stage of a hundred flowers.
Especially for Zhejiang businessmen with the real economy as the root, Wahaha and Nongfu Spring are the best examples.
In 1987, Zong Qinghou took the borrowed 140,000 yuan and made up his mind to establish the Hangzhou Wahaha Nutrition Food Factory, and the oral liquid sold in the early days allowed Zong Qinghou to get the first bucket of gold. After abandoning health care products, Zong Qinghou set his sights on food and beverages, bought the Hangzhou Canning Factory at a sky-high price of 80 million yuan, and developed the first batch of fruit milk and eight treasure porridge.
During the period, Zong Qinghou began to explore a new sales model "joint sales body", which not only guaranteed cash flow but also reduced the cost of sales to a certain extent. In 1996, Wahaha officially entered the bottled drinking water market.
Zhong Sui, who came out of Wahaha, his entrepreneurial trajectory also has a certain similarity with Zong Qinghou, all of which are shifting from health care products to the beverage market. Relying on the turtle and turtle pills to earn 10 million a year, after the policy adjustment, decisively changed to the business of selling water. In 1996, Nongfu Spring also came into being.
Fruit and vegetable drinks, including Huiyuan juice and coconut palm juice, which were born later, were not the beverage darlings of the time, but a rising sun iced tea from Hebei swept through the mid-1990s.
In 1993, Hebei Xuri Group, which started with an investment of 30 million yuan, created a sales miracle of 3 billion yuan in 5 years and opened up a new track for beverage segmentation - tea beverage. Master Kong and Unified Enterprises have also launched iced tea series, inviting major star singers to come to help, and seized the pain points of young people catching up with fashion trends.
However, with the arrival of the millennium, the situation of Rising Sun and Jianlibao has taken a sharp turn. The collapse of the Rising Sun Group was caused by the double pressure of internal management system and external competition, and Jianlibao declined step by step after experiencing high-level blood changes, poor management and other reasons.
On the other hand, "Two Music", in the ten years when the limelight was snatched up by Jianlibao, has methodically expanded the territory of Chinese beverages and carried out diversified brand strategies. Coca-Cola's Coke, Sprite, Eye-catching, Lanfeng, Sunshine, covering soda, tea drinks, juices, etc., PepsiCo also has four flagship products: Coke, Qixi, Mei Nianda and Fluxus, preparing for various segments of the track.
According to data, in 1999, the share of Coca-Cola and PepsiCo in the Guangzhou market was 30.4% and 20.78% respectively, and the two added up to more than half of the share, and the duopoly situation is still difficult to shake.
Across the 21st century, local beverage brands can truly usher in a blowout period. The traditional tea drink Cantonese herbal tea was put into a can, and it was crowned with the effect of clearing the heat and defeating the fire, and the sentence "Afraid of fire, drink Wang Laoji" made the herbal tea drink squeeze into the table of ordinary people. In 2003, the annual sales volume of Red Can King Laoji increased by nearly 400%, and exceeded 1 billion yuan after only one year.
In 2008, Wang Laoji replaced Coca-Cola as the first can in China. On September 3 of the same year, Coca-Cola announced that it would buy Huiyuan Juice in full for HK$17.92 billion. As soon as the news came out, most of the voices in the public tended to terminate the acquisition, lest they repeat the situation in which Qixiong was suppressed, so the acquisition case ended in failure under a burst of public opinion.
Although "Shuangle" is firmly on the leading throne, the entire Chinese consumer beverage market is still in a period of rapid growth, and it will naturally pour into players in various segments, and the status quo of competing for deer has become the norm.
Classic undefeated, after the wave rises
In December last year, some media attention to Coca-Cola broke through the $250 billion market value mark, and even the stock price reached a new high after the epidemic, and today's market value has already exceeded $260 billion. So the century-old Coca-Cola, is it really a worry-free?
The emergence of the Yuanqi Forest, like catfish, stimulated the entire carbonated beverage market, so that the "two pleasures" have a new sense of crisis.
The sugar-free sparkling water of 0 sugar, 0 fat and 0 calorie sugar cleverly pokes at the current Generation Z's need for a balanced combination of healthy eating and good drinking. In the past, it was not possible to coexist with good taste and health. In addition, the name of "sparkling water" is one more word, which to a certain extent gives a new concept of carbonated beverages.
Tang Binsen, the founder of the post-80s, said: China is not short of consumption, what is lacking is good products.
With marketing means and accurate positioning of products, sugar-free beverages represented by Yuanqi Forest began to occupy the minds of consumers. In the two years since its establishment, yuanqi forest's sales have exceeded 1 billion yuan, and in 2020, it has achieved revenue of 2.7 billion yuan, an increase of 309%. The development speed of the up-and-comers really envies many beverage brands, so all kinds of sugar-free, sugar-substitute drinks appear on the shelves of major supermarkets.
It can be said that the rush out of the dark horse of the Yuanqi Forest caught the "two pleasures" by surprise, and forcefully promoted the sugar-free process of domestic carbonated beverages, which also caused the relationship between the two to be in a tense state.
Some insiders said that as of June last year, yuanyuan forest lost 1 billion yuan due to the shortage of sugar erythritol. What's more, the foundry called Yuanqi Forest directly, saying that because it could not withstand the pressure, "Before 12 o'clock this evening, the factory producing Yuanqi Forest must stop working." According to media reports, this is the owner of an international beverage giant personally calling, asking the other party to notify its foundry to immediately terminate the cooperation with Yuanqi Forest.
In 2019, after experiencing many temporary changes in the foundry, Tang Binsen sent a message in the executive group: "We want to build our own factory. Subsequently, Yuanqi Forest's first self-use factory was completed in Chuzhou, Anhui Province, and its own factories were built in four provinces: Guangdong, Tianjin, Hubei and Sichuan. After getting rid of the constraints of the production process, Yuanqi Forest can more break through the Chinese beverage industry.
The wave of new consumer brands is coming, and some traditional local brands are facing the problem of handing over the helm.
Zong Fuli took wahaha from her father's hand, and whether she can continue the myth of selling water is not yet known; 68-year-old Zhong Is still doing her own thing in her post, and has not revealed the information of her successor. Under the impact of the new consumer brand force, how these traditional beverage brands can get out of the strange circle of relying on the helmsman and keep up with the pace of the times is also a major problem.
This year's Spring Festival, Wahaha's very cola returned to the big screen with a new attitude, and it was on the seat of the Spring Festival Gala as soon as it appeared. "Resurrection" is very cola, combined with the popular sugar-free carbonated drinks, and transformed into a national trendy outer packaging. Wahaha's purpose is obvious, to cater to the trend of young people and adjust their brand strategy. This is also a bold attempt by established companies to rejuvenate.
What can be preserved must be in line with the tone of the times.
Between the ups and downs of Chinese beverages in the past forty years, from the early crushing situation of "two pleasures", to the later period of a hundred flowers blooming, and then to the current industry situation of "one super and many strong". Old brands are trying to revive, new brands are reforming and innovating, and those brands that have been eliminated and cannot keep up with the pace of the times will inevitably be forgotten in the torrent of history.