Source | FDL Counting Claims
Author | Father of wasabi
Image source: @VisualChina
Dongpeng Beverage's "Soul Examination Questions": How to innovate and break 10,000 "volumes"?
The big item goes to the world is the king fried of Dongpeng Special Drink's advanced.
On the afternoon of September 21, 2023, Dongpeng Beverage (Group) Co., Ltd. (605499. SH, hereinafter referred to as "Dongpeng Beverage") held a half-year results briefing for 2023. According to its half-year report, Dongpeng Beverage achieved operating income of 5.46 billion yuan, a year-on-year increase of 27.24%; The net profit was 1.108 billion yuan, a year-on-year increase of 46.84%.
It is worth mentioning that its sales revenue of Middle East Pengte Drink was 5.135 billion yuan, accounting for 94.13% of the total revenue. From the financial reports of the past two years, the revenue of Dongpeng special drink series products accounted for 94.66% and 96.24% of the company's total revenue, respectively. Under the circumstance that the domestic beverage market segment continues to expand, Dongpeng Special Beverage has created a high-speed growth "way out" with large items.
Source: Dongpeng Special Drink
It is understood that the product matrix of Dongpeng Beverage includes Dongpeng Big Coffee, Dongpeng Hydration, Sparkling Special Drink, 0 sugar drink and packaged drinking water in addition to the super single Dongpeng Special Drink. For Dongpeng Beverage, the big item strategy is undoubtedly a winning chess piece, however, for any company, long-term dependence on one product is not a long-term solution.
Despite the gratifying rise in the half-year report, Dongpeng Beverage's stock price did not rise significantly after the disclosure of the half-year report, and on September 21, its share price closed at 182.41 yuan, with a total market value of about 72.23 billion yuan, and its share price could not return to the 200 yuan range by press time. Previously, Dongpeng Beverage successively underwent shareholders' actions to reduce their shares, confusing the big move, which made shareholders very panicked.
So behind the market sentiment, what kind of "soul test questions" does Dongpeng Beverage face? At present, how to say goodbye to "big item dependence" is the top priority. In the node of personalized and high-end recruitment in the beverage market, how to innovate and break 10,000 "volumes" at a time when it is becoming more and more volatile? In the future, what else can Dongpeng Beverage rely on to "wake up" and fight" new "awake" stories...
01 Dongpeng Special Drink of "sitting two and looking at one", it is time to bid farewell to "big item dependence"
The stock market is "frustrated", and the single product is "proud".
According to NielsenIQ survey data, in the first half of 2023, the sales volume of Dongpeng Special Drink in China's energy drink market increased from 36.70% at the end of 2022 to 40.86%, ranking first; The proportion of sales increased from 26.62% at the end of 2022 to 29.06%, maintaining the second place.
It can be seen that in the domestic market where the growth rate of the industry has slowed down, Dongpeng Beverage, which "sits on two and looks at one", still relies on large items to achieve rapid growth in sales and profits, and firmly sits on the throne of "beverage brother".
However, although Dongpeng Special Drink is the star trump card in Dongpeng's hands, in the eyes of industry experts, relying on Dongpeng Special Drink alone to enter the future beverage market may not go far. "Big item dependence" has multiple potential risks from the market, consumers and competitors.
Specifically, the energy drink track where Dongpeng Special Drink is located, the industry competition is very fierce.
According to Research and Markets, the global functional drinks market is expected to reach $173.23 billion at a CAGR of 7% by 2025.
According to Euromonitor data, the retail sales of energy drinks in mainland China continued to increase from 26.3 billion yuan in 2015 to 45.2 billion yuan in 2020, with a five-year CAGR (compound annual growth rate) of 11.5%, which is at the leading level in the soft drinks sub-sector, and its proportion in the soft drinks segment has continued to increase from 6.7% in 2015 to 9.3% in 2020.
Taking 2000 as the time node, the most famous functional drinks in mainland China before this were Jianlibao, known as "Oriental magic water", and Thai Red Bull, which entered China in 1995, the former belongs to sports drinks, the latter belongs to energy drinks.
In 2000, functional drinks began to seize the national beverage market, and a number of brands from home and abroad formed a market pattern with a hundred flowers: foreign brands include Monster Energy, Hansen Natural, Pepsi, Coca-Cola, Baoyuanli, etc., and domestic brands include Red Bull Energy Drink, Lehu Vitamin Drink, Le Bai's "Pulse", Nongfu Spring's "Scream", Master Kong's "Run" and so on.
Among them, Red Bull entered the Chinese market with a strong advertising offensive and became the most recognized functional beverage brand in the domestic market; Pulsating drinks are deeply rooted in the heart through the concept of "vitamin water" and unique packaging.
With the increase in the category of functional drinks, consumer recognition is gradually increasing. Nowadays, in addition to the well-known brands mentioned above, there are also many new consumer brands and corporate layouts in recent years.
For example, Yuanqi Forest's brand Alien, the national brand Panpan's leopard power, the new brand Instant Solution, the new hope launched the women's functional drink "Shine Now", the tea brand Tea Soon, etc., in addition to plant drinks such as a whole stick of ginseng water have also entered the market to seize the market. Foreign companies have also entered the domestic energy drink market to try to get a piece of the pie, and the American energy drink brand "Devil's Claw" came in in 2016 and was once regarded as Red Bull's biggest competitor.
On the whole, the domestic functional drink market continues to roll in, and new and old brands such as Lehu, Pulse, Baomine Lishui Te, and Yuanqi Forest are chasing after Dongpeng Beverage, which occupies the forefront of the industry, and Dongpeng Beverage only relies on a large single product series, which is still somewhat insufficient in the face of the strong offensive of competing products.
Charting: FDL Counting Food Claims
Under internal and external troubles, FDL Digital Food believes that the brand vitality of Dongpeng Special Drink has been somewhat aging at present, no matter how innovative, upgraded and iterative this large product is, it may have little effect, change the thinking, and start to choose the era of farewell to the "big item" of functional drinks in a timely manner, and move towards a diversified market segment is a long-term solution. This, perhaps, is a good start.
02 To create the "second and third growth curves", new tricks are needed around the enemy
The empire of Dongpeng Special Drink was laid down by Lin Muqin, a Chaoshan people.
Like the name, Lin Muqin has the hardworking spirit of "love to fight to win". Lin Muqin publicly stated at the 2022 Group Summary and Commendation Conference: "In the next three years, we must cultivate and develop the second growth curve. We cannot have a lying down mentality. If you don't learn, your own ability can't keep up with the company's development speed, and you will be eliminated. ”
Here, the development strategy of "comprehensive development of the country and cultivation of the second curve" in 2023 refers to the construction of the "Dongpeng Energy +" product matrix while pouring resources into cultivating the second curve products, vigorously supporting the development of new categories such as Dongpeng big coffee, Dongpeng hydration, and oil orange juice, and cultivating new growth points for the healthy and sustainable development of the enterprise in the future.
From a product perspective, one of the best solutions to share risk is to find new growth points.
Taking Xiaomi's left-hand large model and right-hand car manufacturing huge product power as an example, from a series of product layouts from mobile phones, TVs to computers at the beginning, Xiaomi's layout is committed to becoming an intelligent ecological platform, focusing on user interaction and continuously extending Xiaomi's current ecosystem.
From the perspective of finding a new growth curve in the next decade, Xiaomi's entry into the smart car market also has more realistic significance. In contrast, only high-value, high-potential products such as smart cars can raise Xiaomi's long-term growth space. It can be seen that whether it is market size or profit level, Xiaomi's performance is quite outstanding. Known as the "millet" of the energy drink industry, Dongpeng Beverage is also looking for new growth space.
Among the many new products, Dongpeng Beverage has high hopes for "Dongpeng Big Coffee". Previously, when accepting a survey of institutional investors, Liu Lihua, vice president and secretary of Dongpeng Beverage, said that Dongpeng big coffee will be regarded as the "second curve" in 2023 and invest resources in key development. At present, this product, which entered the ready-to-drink coffee track in 2021, is the most successful case of segmentation and positioning in the history of Dongpeng Beverage's development.
Due to the overlap between functional drinks and coffee, Dongpeng Beverage's strategy has a good chance of success. Both have "refreshing" attributes, which are easy for consumers to accept. Unlike Dongpeng Special Drink, which targets drivers and workers, "Dongpeng Big Coffee" targets urban white-collar workers who love instant and freshly ground coffee. This differentiated positioning helps Dongpeng Beverage break the game.
Although it is currently in the process of upward breakthrough, the "Dongpeng big coffee" is also facing great resistance.
On the one hand, the domestic ready-to-drink coffee market has continued to grow in recent years, consumer cognition has basically formed, and Dongpeng Beverage has to face the pressure of competition from freshly ground coffee brands such as Starbucks and Luckin across the circle, and the road to development is not easy; On the other hand, the reality that its bottled coffee has been tepid against the industry leader Nestlé also shows from the side that "Dongpeng Big Coffee" as a new growth point of the company still needs to strengthen competition and online and offline integration channel operation capabilities.
Fortunately, Dongpeng Special Drink's consumer reach and channel layout have "paved the way" for Dongpeng big coffee. Based on Dongpeng Beverage's investment in digitalization, the consumer connection and channel layout around one thing and one code also pointed out the direction for Dongpeng big coffee.
In addition, Dongpeng Beverage has also made many attempts and investments in the business layout of China's beverage market. In December 2021, Dongpeng Beverage launched a new energy drink product "She Cang" for female target groups, which claims to be zero fat and no added sucrose; In May 2022, Dongpeng Beverage launched a new Dongpeng bubble special drink; In January this year, Dongpeng Beverage officially announced the launch of a new electrolyte drink, "Dongpeng Hydration", officially cutting into the electrolyte beverage track.
Unfortunately, these segments have not become a hit in the market. According to the data of the 2022 annual report, the sales revenue of beverage products other than Dongpeng Special Drink fell by 14.23% year-on-year last year. It can be seen that under the watchful eye of the enemy, it is not easy to develop the "second and third growth curves". FDL Digital Food believes that Dongpeng Beverage wants to start from Dongpeng Special Drink and then extend to the subdivision field, and it will take time to explore the needs of consumers.
It is understood that in addition to the development of the second curve, the well-funded Dongpeng Beverage is also opening up industrial investment routes, which may be a new trick in addition to Dongpeng Beverage products. Dongpeng Beverage announced that the company intends to invest in high-quality listed enterprises upstream and downstream of the domestic and foreign industrial chain by means of securities investment, with a total investment of no more than 50% of the net assets in 2021, that is, no more than 2.1 billion yuan.
03 Keep the old base camp, do a good job in market segmentation advantages, and open up future imagination
As we all know, product development takes time. Marketing can be held high and high, and miracles can be produced in a short time.
With an advertising slogan similar to Red Bull's: "Sleepy, tired, drink Dongpeng special drink", Dongpeng special drink is all over the country. Even if there is a suspicion of copying homework, but at the same time, due to the dispute over the trademark rights of Sino-Thai Red Bull, Red Bull has no time to take care of Dongpeng Special Drink.
The success of Dongpeng Beverage is inseparable from heavy marketing. According to the financial report data, from 2020 to 2022, the sales expenses of Dongpeng Beverage will be 904.3 million yuan, 1.368 billion yuan and 1.449 billion yuan, respectively, showing an upward trend year by year. Sales expenses accounted for 17.04% of revenue in 2022. Among them, publicity and promotion expenses increased by 31 million yuan over the same period of the previous year, an increase of 3.81%.
Focusing on the customer strategy of "8 groups and 20 categories" key consumer groups, Dongpeng Beverage focuses on deepening the e-sports crowd, driving crowd and sports crowd, and makes vigorous efforts in marketing and delivery channels through various film and television drama implantation, sports event sponsorship, Douyin, B station and other gameplay, adhering to young marketing, and committed to the needs of young consumers.
Dongpeng Beverage's "flow-based" game is to play with young people. For example, it has carried out in-depth cooperation with the Central Radio and Television Corporation, Hunan Satellite TV and other media, deeply implanted in the four hot dramas of "Breaking Elite", "Meet the Brilliant You", "Happiness to Ten Thousand Homes" and "Ice Rain and Fire", two variety shows "The Voice of God" and "Brave Us", the first online concert of Han Hong, and high-frequency hard marketing such as voice through new media platforms such as Xiaohongshu and Zhihu, reaching the target group in an all-round way and striving to create a new benchmark for young beverages.
However, in great contrast to the heavy investment and marketing, from 2020 to 2022, the R&D expenses of Dongpeng Beverage will be 35.54 million yuan, 42.8 million yuan and 43.75 million yuan respectively, which is not only far from the sales expenses, but also accounts for less than 1% of revenue. In terms of growth rate, Dongpeng Beverage's sales expenses increased by 5.91% year-on-year in 2022, while R&D expenses increased by 2.23%. At the end of 2022, the number of R&D personnel in the company was 163, an increase of 29 compared with 2021.
Dongpeng Beverage is obviously unable to escape the accusation of emphasizing marketing and light research and development. For long-term development, increase investment in product research and development, cost, etc., and make breakthroughs in products to form brand stickiness. Blindly throwing money for marketing and product quality is difficult to guarantee, it will cause the illusion of appearance, and it will eventually be abandoned by consumers. What's more, the weight of R&D investment and the weakening of marketing investment are the keys to the long-term prosperity of an enterprise, which undoubtedly makes the future of Dongpeng Beverage full of imagination.
It is worth imagining the future space that is on the agenda with the development plan of Dongpeng Beverage's new subdivided functional drinks based on Chinese medicinal materials such as orange, astragalus and fruits, which is the company's innovative move to integrate the hot elements of the market into the main brands and product formats, and the real dislocation competition may become the "third growth curve" for Dongpeng Beverage's complete transformation and ushering in a new round of take-off.
Dongpeng Beverage, which regards new product research and development as its main competitiveness, in the future, once it builds new barriers in product development and innovation, coupled with its channel layout of more than 3 million active terminal outlets accumulated for a long time, it can completely create a bloody road for subdividing new products.
As a comprehensive beverage group that is shifting from a single category to a multi-category, although the high marketing expenditure in the past few years once formed a huge contrast with the almost negligible R&D investment, Dongpeng Beverage has increased R&D investment and will make a difference in the ecological construction of brands, categories and channels, such as building a brand matrix, category matrix, channel matrix, etc., and will continue to upgrade brand rejuvenation in response to the trend of younger consumer groups.
In the new vision of Dongpeng Oil, Dongpeng Beverage should develop in multiple lines.
However, the capital market and consumers have not left Dongpeng Beverage with too long time to take off, how to accelerate the process of R&D and new product launch, how to efficiently innovate and break 10,000 "volumes", is exactly the "soul test" of Dongpeng Beverage Group. Whether it is to continue to trial and error, or to start a new strategy, what Dongpeng Beverage needs to do is to prove that it is not only Dongpeng Special Drink, but also other beverage businesses that are sustainable in profit and growth.
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- 1. Energy drinks: huge market bottleneck| Packaging Intelligence
- 2. Exclusive interpretation! 5 trends in the functional beverage industry in 2022, these raw materials are "new favorites"|Zhihu
- 3. Develop the second growth curve, is Dongpeng Beverage's coffee business easy to do? |
- 4. Xiaomi's strong growth of the three axes: dual-brand strategy, channels, technology together! |
- 5. Is it too early for major shareholders to rush to "share the cake" with many hidden worries? | Southern Metropolis Daily Ao Yi Net