#精品长文创作季#
"Seeking stability" or "seeking change" is actually a dilemma that has lingered in Cestbon's mind for a long time.
Author: Jin Nuo Boya Editor: He Xiang
出品：零售商业财经 ID：Retail-Finance
On April 23, China Resources Beverage (Holdings) Co., Ltd. (hereinafter referred to as "China Resources Beverage"), the parent company of the pure water brand "Cestbon", submitted a listing application to the main board of the Hong Kong Stock Exchange, with Bank of China International, CITIC Securities, Bank of America Merrill Lynch and UBS Group as joint sponsors.
Source: China Resources Beverage Prospectus
In fact, since 2022, China Resources Beverage has been rumored to be preparing to promote Cestbon to be listed in Hong Kong several times, with a financing scale of US$1 billion (about 7.82 billion yuan), and now the boots have landed. If successfully listed, it will be the 18th listed company of China Resources Group, and become the second domestic leading packaged drinking water company listed on the Hong Kong stock market after Nongfu Spring.
Just when China Resources Beverage launched its listing, the drinking water market regenerated "ripples".
On April 23, according to a number of media reports, Nongfu Spring will launch green bottled drinking purified water. Industry insiders believe that Nongfu Spring's move to enter the hinterland of pure water is a declaration of war on brands such as Wahaha and C'estbon. So far, Nongfu Spring has not publicly responded to this.
01 14.6 billion bottles of Cestbon are sold a year, and ninety percent of the revenue comes from drinking water
Judging from the financial data, the "report card" of China Resources Beverage can be called excellent.
According to the prospectus, from 2021 to 2023, China Resources Beverage will achieve revenue of about 11.340 billion yuan, 12.623 billion yuan and 13.515 billion yuan respectively, with an average annual compound growth rate of 9.2% for three years, and the profit during the year will be about 858 million yuan, 989 million yuan and 1.331 billion yuan respectively, with an average annual compound growth rate of 24.6%, and the net profit margin will increase from 7.6% in 2021 to 7.8% in 2022 and further increase to 9.9% in 2023.
Source: China Resources Beverage Prospectus
From the perspective of products, CR Beverage has a product portfolio of 13 brands, including "Cestbon", "Zhiben Qingrun", "Honey Water Series", "Holiday Series" and "Zuowei Tea", with a total of 56 SKUs (single products). The diversified product portfolio covers the core categories of the ready-to-drink soft drink market in China, such as packaged water, tea and fruit juice beverages.
Source: China Resources Beverage Prospectus
Among them, the revenue of packaged drinking water products from 2021 to 2023 will be about 10.818 billion yuan, 11.906 billion yuan and 12.447 billion yuan respectively, and the revenue of other beverage products will be 522 million yuan, 717 million yuan and 1.351 billion yuan respectively.
From the perspective of revenue contribution, more than ninety percent of CR Beverage's revenue in 2023 will come from packaged drinking water, and the contribution of other beverage products will be less than 8%.
Source: China Resources Beverage Prospectus
In the prospectus, China Resources Beverage quoted a CIC consulting report showing that the company is currently the second largest packaged drinking water company in China and the largest drinking water company in China. In 2023, CR Beverage sold more than 14.6 billion bottles of "Cestbon" brand water products, with an annual retail sales of more than 30 billion yuan for a single product, making it the No. 1 brand in China's drinking water market.
In addition, CR Beverage's market share in the packaged drinking water market and the purified drinking water market in 2023 will be 18.4% and 32.7%, respectively.
Source: China Resources Beverage Prospectus
(According to the data, the top five companies are Nongfu Spring, China Resources Beverage, Jingtian, Wahaha and Master Kong)
In the prospectus, China Resources Beverage said that in terms of retail sales, drinking purified water is the largest segment of China's packaged drinking water market, reaching 120.6 billion yuan in 2023, accounting for 56.1% of China's packaged drinking water market. The segment is expected to continue to grow, with retail sales reaching 179.8 billion yuan by 2028, accounting for 57.2% of China's packaged drinking water market.
Due to the rapid production expansion and low logistics cost of drinking water, CR Beverage expects that drinking purified water will remain prominent in the next five years, and the expected growth rate is higher than that of other market segments of packaged drinking water.
02 Changed hands twice, and came out on top
The predecessor of China Resources C'estbon was China Longhuan (Shekou) Co., Ltd., which was established in 1984, and at that time it mainly focused on fruit juice drinks such as "prickly pear juice", but the market feedback was relatively average.
In 1990, the company launched "Cestbon brand" purified water for the first time, becoming one of the earliest enterprises specializing in the production of packaged drinking water in China.
Source: Internet
But the following year, the company was acquired by Vanke with a 51% stake and made a fundamental change, directly abolishing the previous beverage business and making purified water its main business.
However, the good times were short-lived, and in the past five years alone, Vanke's business situation has been in trouble. As a non-core business, Cestbon was "ruthlessly" divested and acquired by China Resources Group for 10 million in 1999.
After China Resources took over, Cestbon changed the bottle packaging, but still used the "Yibao" logo and the French C'estbon (meaning "beautiful"), constituting the image of the green bottle that we are quite familiar with today.
Source: Internet
Since then, Cestbon purified water has become a popular product among drinking water brands and the star product of China Resources C'estbon.
Source: CITIC Securities
After many changes in shares and business entities, in 2004, Cestbon clarified its own brand positioning - to be a national professional drinking water company. Since then, Cestbon has continued to expand its business scale and market share, gradually gaining a firm foothold in the drinking water market.
In the bottled water market in mainland China, Nongfu Spring has long been ranked first, with a market share of 26.5%, while China Resources C'estbon ranks second with a market share of 21.3%.
Source: Guanyan World
From 2017 to 2019, the company achieved operating income of 10.035 billion yuan, 10.435 billion yuan and 10.396 billion yuan respectively, with a revenue scale of about 10 billion yuan, and a profit of 631 million yuan, 727 million yuan and 863 million yuan.
In the following three years, Cestbon did not disclose relevant revenue data, only profit data. From 2019 to 2021, CR C'estbon achieved profits of 863 million yuan, 1.037 billion yuan and 1.205 billion yuan respectively, and the return on total assets was 13.85%, 14.23% and 14.23% respectively.
Source: China Resources C'estbon 2021 Sustainability Report
On the whole, Cestbon's revenue has grown steadily in the past 20 years. In 2023, CR Beverage's packaged drinking water business will achieve revenue of 12.447 billion yuan, accounting for 92.1%. This also shows that although the products span many fields and are well-known, the drinking water represented by "Cestbon" is still the core of the company's absolute income.
At present, CR Beverage is continuing to expand its production capacity. According to the prospectus, in the first three quarters of 2024, the company's Biyouxuan factory, Changsha factory, Yixing factory, Wanlvhu factory, Wuyishan factory, and Chengdu factory will be put into operation, and it is expected to increase the production capacity of 7.1 million metric tons of packaged drinking water and 350,000 metric tons of beverage production capacity.
03 The endogenous force is insufficient, and the second growth curve has not yet become a climate
As one of the first batch of enterprises in China to specialize in the production of packaged drinking water and process production, and is also one of the first enterprises to achieve a revenue scale of 10 billion yuan, China Resources C'estbon is significantly behind Nongfu Spring, the top 1 in the industry, in terms of influence.
In the author's opinion, there are three reasons: one is the low ceiling of the pure water business, the second is the lack of comprehensive product power, and the third is the lack of brand power.
As we all know, there is little difference in the taste of packaged drinking water, the main difference is in the water source, and there are not many innovations based on the product itself. But even so, major manufacturers are still working packaged drinking water and trying their best to differentiate.
Taking Nongfu Spring as an example, in addition to the classic red bottle model, it has also developed eight series of natural water suitable for infants and young children, Changbai Snow, which focuses on snow water, and Wuyi Mountain spring water, with more than a dozen capacity specifications.
Source: Internet
In the bottled water market, where water sources determine taste and value, the layout of water sources is the core competitive barrier for brands.
Compared with Nongfu Spring's sparing no effort in water source mining, Cestbon's main business "pure water" has become the biggest obstacle to its brand to enhance its product strength.
Source: Internet
Different from mineral water, purified water is oxygenated active water that has been purified to reach the level of direct drinking, without any minerals and trace elements, so there is no difference in water sources, which directly cuts off the possibility of Cestbon relying on water sources to tell stories.
In contrast, C'estbon purified water is a product with only capacity specifications, no water source distinction, and no quality difference.
The single variety of pure water severely limits the height that Cestbon can reach in the bottled water market, so Cestbon must tap the potential of the subdivision track.
However, Cestbon acted too late, and it was not until April 2022 that the "Cestbon Dew" mineral water series was launched, making its first foray into the high-end mineral water market.
Helplessly, the high-end water market has long been carved up by high-end water brands such as Evergrande Ice Spring, Baisui Mountain, Evian, etc., and consumers are relatively mature, and it is difficult for Cestbon as a latecomer to successfully enter in a short period of time.
The price of 15 yuan per bottle (350ml) of Cestbon Dew has made many consumers say "unaffordable", and the sales have not been satisfactory.
Source: The brand's official website
In the high-end mineral water market, C'estbon, due to the positioning and image of the main brand resulting in low added value, it is difficult to form a high-end brand market-oriented cognition, quite "up early in the morning to catch up with a late set" state, now it is still in the hearts of most consumers The image is still a brand that only sells pure water.
It can be said that after years of development, China Resources C'estbon is still eating the old capital of the pure water business, and has failed to form a second growth curve.
In the packaged drinking water industry, which has relatively low product barriers, in addition to the quality difference of the water source, the major brands are focused on brand marketing and concept packaging.
Zhou Jingliang, the founder of Baisui Mountain, once said: "Baisui Mountain sells not only water, but also water culture. Nongfu Spring has been firmly in the top spot in the drinking water industry for several years with the advertising slogan "Nongfu Spring is a little sweet".
Due to the lack of C'estbon pure water business and other categories of product power, it is difficult to make a breakthrough in brand marketing, just like pure water itself, there is nothing, and it is difficult to tell a new cultural story.
The above three reasons are mutually restrictive and influential, resulting in the current innovation space of Cestbon is very limited and the endogenous force is insufficient. As food industry analyst Zhu Danpeng said: "If you want to break through in the competitive landscape of drinking water, which tends to be stable, and if you want to maintain your original position in the involution market, you need a new story." ”
Cestbon alone relies on "pure water" to tell a new story, and the beverage line that has been paved for many years has not yet become a climate, and a single product line has become the biggest uncertain factor in Cestbon's IPO journey.
04 The increment is limited, and there are internal and external troubles
"Seeking stability" or "seeking change" is actually a dilemma that has lingered in Cestbon's mind for a long time.
As early as more than 20 years ago, Cestbon also had ambitious cross-border moves. In 1999, Cestbon launched a variety of beverage products such as soybean milk, Feel fruity tea, pure tea, etc., and invested 200 million yuan in soybean milk products to put into production. It's a pity that after years of practice, these products finally failed, and also caused a lot of losses to Cestbon.
Source: Internet
Combined with the ups and downs of Cestbon changing hands twice, after clarifying the development orientation of "professional drinking water" in 2004, China Resources C'estbon no longer seeks change, and only does "water" business in a down-to-earth manner.
The gradual change in the market has made Cestbon, which has gained a firm foothold in the drinking water market, aware of the hidden danger of a single category, but is worried that it will repeat the mistakes of the soybean milk business.
As a result, Cestbon has explored a new way to compromise. In 2011, China Resources C'estbon cooperated with Japan's Kirin to jointly launch a multi-category beverage business, officially launching the product matrix of "water + beverage".
The diversified beverage lines we see so far are the crystallization of the "marriage" between Cestbon and Japanese Kirin. But Japan's Kirin announced its withdrawal in 2022, drawing an imperfect end to this 12-year "marriage" cooperation.
Source: Internet
In January 2022, Japan's Kirin issued an announcement on the sale of China Resources Kirin shares, and finally sold the joint venture beverage business for 115 billion yen, officially ending the cooperation with China Resources C'estbon.
The diversified beverage business, which has been laid out for more than ten years, has not improved, and it is reasonable for Kirin to leave for the sake of stopping losses.
This also proves that China Resources C'estbon has been focusing on "seeking stability" for many years, although it claims to walk on two legs, its sales and marketing focus is still on the pure water business.
For the beverage business, whether it is channel laying or advertising, Cestbon does not seem to have invested enough effort. Many consumers don't even know that these are Cestbon's products, and naturally they can't make a brand voice.
Source: Internet
However, there are other views that Kirin's withdrawal of shares is to pave the way for the listing of China Resources C'estbon in the future.
Whatever the motives, there is no doubt that the marriage has failed, and there is still a gap between Cestbon's current situation and the diversified beverage brand positioning it is pursuing.
In recent years, CR C'estbon has made significant efforts in the field of products other than pure water. In 2021, Cestbon will open new water source production bases in Changbai Mountain, Heyuan and other places, with a total investment of more than 6 billion yuan.
But selling water will earn more than one billion a year, for China Resources C'estbon, these new projects have to continue to invest funds, this time China Resources C'estbon is anxious to go public, most likely to prepare for a large amount of fundraising.
In addition to the impact of the lack of brand influence and the collapse of the beverage business, the purified water business of China Resources C'estbon has gradually become a stock market and has suffered many challenges.
In addition to Nongfu Spring, a "visible" rival, there is no shortage of "invisible" opponents such as Yuanqi Forest and Dayao around Cestbon. For example, new players who have cut into drinking water from the beverage track, and most of these new players are potential players who have made good achievements in the beverage field and are trying to get a share of the drinking water market.
The second growth curve is difficult to achieve results, and the main business is facing many competitors and restrictions, and China Resources C'estbon can be described as internal and external troubles.
After more than 20 years of quiet, China Resources C'estbon has reached a critical juncture where it has to "seek change", otherwise the status of the "second thousand-year-old" may not be guaranteed.