The parent company of the "little green bottle" Cestbon is about to go public.
Recently, China Resources Beverage(Holdings) Company Limited (hereinafter referred to as "China Resources Beverage"), the parent company of Yibao, submitted a prospectus to the Hong Kong Stock Exchange to be listed on the main board of Hong Kong. The joint sponsors are Bank of China International, CITIC Securities, Bank of America Merrill Lynch and UBS.
China Resources Beverage, formerly known as China Longhuan (Shekou) Co., Ltd., was established in the 80s of the 20th century. After the official launch of "Cestbon" purified water in 1990, CR Beverage became one of the earliest enterprises in China to specialize in the production of packaged drinking water. According to the prospectus, China Resources Group (Beverage) holds 60% of the shares of China Resources Beverage and is its largest shareholder company.
Water Hibiscus/photo
92% of revenue comes from drinking water
In terms of finance, from 2021 to 2023, CR Beverage's revenue will be 11.34 billion yuan, 12.623 billion yuan and 13.515 billion yuan respectively, corresponding to a three-year gross profit margin of 43.8%, 41.7% and 44.7%, and a net profit of 858 million yuan, 989 million yuan and 1.331 billion yuan.
Recently, food and beverage companies have released their 2023 financial reports. In terms of revenue scale, CR Beverage is the fifth largest beverage company in China (excluding wine companies and dairy companies), ranking behind Wahaha Group, Master Kong (beverage sector), Nongfu Spring and Uni-President China (beverage sector).
However, compared with companies such as Master Kong and Nongfu Spring, the performance of China Resources Beverage is more dependent on the packaged drinking water business. In the past three years, the revenue of China Resources Beverage Packaged Drinking Water was 10.818 billion yuan, 11.906 billion yuan and 12.447 billion yuan respectively, accounting for 95.4%, 94.3% and 92.1% of the company's total revenue.
In the packaged drinking water market, the two major brands of Cestbon and Nongfu Spring occupy half of the country.
According to data from the China Business Industry Research Institute, Nongfu Spring and China Resources C'estbon accounted for 26.4% and 20.9% of China's packaged drinking water market share in 2022, respectively, accounting for more than 47% in total. Baisui Mountain, Master Kong, and Binglu accounted for 9.6%, 9.3%, and 8.8% respectively.
According to the data of the CIC Consulting report, the Cestbon brand will still rank second in the overall packaged drinking water market share in 2023, second only to Nongfu Spring. In terms of regions, CR Beverage Packaged Drinking Water ranked first in the market share of China's six major provinces (Guangdong, Hunan, Sichuan, Hainan, Guangxi, and Hubei), and the other 17 provinces ranked in the top three. From the perspective of the purified water segment, the retail sales of the Cestbon brand will reach 39.5 billion yuan in 2023, accounting for 32.7% of the market share of drinking purified water.
Seeking to "walk on two legs"
In recent years, China Resources Beverage has also focused on the development of beverage business, trying to "walk on two legs".
In 2011, three China Resources beverage products, Afternoon Milk Tea, Fire Coffee and Magic, were launched, and in November 2018, Liu Hongji, then General Manager of China Resources C'estbon, said that "walking on two legs" of water and beverages was the focus of breakthroughs during the 13th Five-Year Plan period.
From the perspective of the development history of CR beverage products, the company has only taken the beverage business as the focus of development in the past five years. Up to now, CR Beverage has 33 SKUs in its beverage product segment, including 33 SKUs such as the fruit juice beverage "Holiday Series" and the herbal beverage "Zhiben Qingrun", including tea drinks, fruit juices, coffee and sports drinks.
In 2023, the revenue of the beverage segment will be 1.068 billion yuan, a year-on-year increase of 49%, accounting for 7.9% of the company's total revenue. In the first two years, this sector accounted for 4.6% and 5.7% of the revenue of China Resources Beverage.
Last year's financial reports of major beverage companies such as Nongfu Spring, Master Kong, and Uni-President showed that compared with drinking water, beverage products have more room for growth. Nongfu Spring's packaged drinking water revenue exceeded 20 billion yuan, a year-on-year increase of 11%, and the revenue of tea beverage products exceeded 12.6 billion yuan, a year-on-year increase of 83.3%. Master Kong's ready-to-drink tea increased by 6.96% year-on-year to revenue of 20.059 billion yuan.
It has been more than five years since CR Beverage put forward the "two-legged walking" strategy, and the development of its beverage product business is slightly behind that of other giants. According to the prospectus of China Resources Beverage, if it is successfully listed, the company plans to use the raised funds to expand production capacity, expand channels, and enhance research and development.
First, CR Beverage plans to expand production capacity and optimize supply chain efficiency to help further increase market share, operational efficiency and profitability. Specifically, the company plans to complete the construction and expansion of existing factories in Zhejiang, Hubei, Chongqing and Shanghai from next year to the following year, which will be used to produce packaged drinking water and beverage products.
Second, it plans to accelerate the expansion of sales channels and improve channel efficiency. In the past three years, the distribution and sales expenses of CR Beverage were RMB3.757 billion, RMB3.878 billion and RMB4.087 billion respectively, accounting for 33.1%, 30.7% and 30.2% of the total revenue of the year, respectively. Among them, the marketing and promotion expenses in the three years were 1.047 billion yuan, 963 million yuan and 1.074 billion yuan respectively. The prospectus pointed out that in the future, marketing will be optimized and refrigerated display cabinets will be increased, which is crucial for terminal sales, especially the promotion of beverage products.
In addition, the funds raised by the company will be used to further enhance product research and development capabilities. According to the prospectus, the R&D cost of China Resources Beverage will increase from 49 million yuan in 2022 to 62 million yuan in 2023.