Red Bull competes for Dongpeng Deli?

Recently, Reignwood FMCG Group (hereinafter referred to as "Reignwood Group") issued a notice stating that in order to further standardize the order of national cargo flow, it will carry out a special cargo flow rectification action from April 18, and carry out a comprehensive shutdown and supply ban action on all 2B, 2C and community e-commerce platforms across the country, and complete the comprehensive shutdown of all e-commerce platforms involved in low prices and disrupting market order within one month of the issuance of the notice.

Although the purpose of this rectification action is to stabilize the price order, this is also interpreted as the "sequelae" brought about by the trademark dispute with Thailand's Tencel Group. Since 2016, Reignwood Group and Thailand Tencel have conducted several rounds of litigation and exchanges on the ownership and authorization of the Red Bull trademark, which is still ongoing and has been extended to the product and market level.

At present, Reignwood Red Bull can not be listed on the mainstream 2C platforms such as Jingdong and Tmall, and Tencel Group has a large gap with Reignwood in terms of sales, in order to compete for more markets, Tencel has also been moving continuously in China in the past two years, through the construction of factories, the promotion of new products, the registration of new companies and other ways to step up the layout, the latest news is that at the recently held Fourth Consumer Expo, Tencel Group launched the first bottled Red Bull product in China.

Under the strife, other competitors are also catching up, such as Dongpeng Special Drink and other brands have quickly seized the market in recent years, leaving little time for Red Bull.

From cooperation to division, the Red Bull court of China and Thailand confronted each other

In fact, the dispute over the "Red Bull" trademark has been going on for a long time. It is reported that in 1998, Tencel Group, as the holder of the "Red Bull" trademark, established a joint venture company - Red Bull Vitamins with Yan Bin, the head of Reignwood Group, and other relevant parties, authorizing the company to have the sole right to produce and sell Red Bull products in China. Data shows that in less than ten years, China Red Bull exceeded 1 billion yuan in annual sales, and reached 10 billion yuan in sales in 2012. In this year, Xu Shubiao, the founder of Tencel Group, passed away, and his son Xu Xinxiong took over Thailand Tencel, which laid the foundation for Sino-Thai Red Bull.

In 2016, Tencel Group sued a number of factories, sales companies and even distributors of Reignwood Group on the grounds of "infringement of the exclusive right to use registered trademarks" and "unfair competition", and the two parties started a tug-of-war in trademark cases.

According to China Red Bull, when China and Thailand began to cooperate, not only did they reach a stipulation that "only China Red Bull has the right to produce and sell Red Bull drinks in China, and no other party may sell them until they have obtained written permission or consent", but Yan Bin and Xu Shubiao signed a "50-year agreement".

However, because there was a domestic policy at that time, "the production of foreign brand non-alcoholic beverages (including solid beverages)" was a restricted foreign investment project, and the term of the joint venture should not exceed 30 years in principle. Coupled with some other reasons, China Red Bull and Thailand's Tencel signed a 20-year business term. Obviously, Xu Xinxiong does not agree with this statement.

On December 21, 2020, the Supreme People's Court clarified that Thai Tencel is the owner of the Red Bull series trademark. However, Reignwood Group does not agree with this verdict.

The "50-year agreement" became the key evidence, and the court made a ruling and then revoked it

Whether the authorization of the "Red Bull" trademark is 20 years or 50 years has become the focus of the struggle between Reignwood and Tencel for many years.

In February 2022, Reignwood Group disclosed through official channels that it had submitted the original 50-year Agreement to the judicial department as an important basis for the retrial of the case. Article 1 of the original document stipulates that "only China Red Bull has the right to produce and sell Red Bull beverages in China" and "Thai Tencel shall not produce or contract to other companies to produce or sell similar products of Red Bull beverages in China", which is also considered to be the key evidence in the Red Bull trademark case.

However, Tencel Group does not recognize the Agreement. It then issued a statement saying that in response to the sudden appearance of the "50-year agreement", Tencel Group has applied for judicial appraisal in accordance with the law.

In July 2023, the Beijing No. 4 Intermediate People's Court issued a ruling rejecting all of Reignwood Group's claims regarding the "50-year agreement". The court held that the "50-year agreement" was not a composite contract and did not have the basis for the right to claim for split-off, so the plaintiff China Red Bull's claim did not have a basic procedural legal basis. In addition, the establishment of China Red Bull is one of the contents of the "50-year agreement", and China Red Bull should be the object of the contract rather than the subject of the contract, and it does not enjoy contractual rights and does not have the obligation to perform, so it is not a qualified plaintiff in this case.

Subsequently, Reignwood Group appealed to the Beijing High People's Court against the first-instance ruling, still holding the original reasons for filing the lawsuit, requesting that the civil ruling of the original trial court rejecting the lawsuit be revoked. The latest news is that in December 2023, the Beijing High Court revoked the above-mentioned first-instance ruling, and the case continued to be heard.

The trademark dispute affected the channels and distributors, and a number of Reignwood Red Bull dealers were sued

After years of tug-of-war, the contradictions and conflicts between Reignwood Group and Tencel Group have not stopped there, but have intensified, and the trademark dispute has already spread to the channel and distributor level.

In June 2021, Huaxia Sugar & Liquor Company, a distributor of Reignwood Group, was accused of banning the sale of China Red Bull, and then Reignwood issued a statement saying that Huaxia Sugar & Liquor Company maintained normal cooperation with Reignwood Group, and pointed out that behind the incident was Tencel Group's public opinion hype and fueling the flames. Reignwood said that Tencel Group and its agents in China continued to cause serious nuisance to China Red Bull's channel partners, and after obtaining procedural documents or rulings through a large number of complaints and lawsuits, they hyped up public opinion before the substantive ruling, which has seriously deviated from the nature of legal proceedings for the purpose of protecting legitimate rights and interests.

In June 2023, the Intermediate People's Court of Nanjing Municipality, Jiangsu Province, made a first-instance judgment in the case of Tencel Pharmaceutical and Healthcare Co., Ltd. suing Metro Commercial Group Co., Ltd. for trademark infringement of Nanjing Yuhua Mall and Metro Commercial Group Co., Ltd. The sale of "Red Bull Vitamin Functional Drink" by Metro Commercial Group Co., Ltd. constituted trademark infringement, and it was required to immediately stop the sale and compensate Tencel 300,000 yuan.

In this regard, Reignwood said that the relevant judgment is the result of the first instance and does not represent the final judgment, and at the same time believes that Tencel Group has no right to operate Red Bull Beverage in China, and it has neither the right nor the necessity to use the Red Bull trademark in China.

Tencel Group said that according to incomplete statistics, since 2020, the market supervision departments in many places across the country have investigated and dealt with the illegal acts of infringing on the exclusive right to use the registered trademark of the Red Bull brand Tencel Group, and have made more than 5,000 law enforcement documents such as risk warnings, administrative warnings, corrections, and administrative penalties.

Tencel Group also said that as of April 2023, the infringing enterprises controlled by Reignwood Group and its subsidiaries have been awarded 450 million yuan in compensation by courts in many places across the country for trademark infringement. Tencel Group will pursue the sale of infringing Red Bull products to the end and protect its legitimate rights and interests.

Sino-Thai Red Bull products are head-to-head in the market, and latecomers such as Dongpeng are catching up against the trend

It is worth noting that while constantly resorting to court, Reignwood Group has launched the brand "War Horse", which is also a functional drink, and after years of market cultivation, the brand power of War Horse has become one of the second camp of domestic functional drinks.

Not to be outdone, Tencel Group is not to be outdone. It is understood that Tencel Group first launched the "Red Bull Anaeji Beverage" in the Chinese market, and at the end of 2019, it launched a new version of the Thai imported version of the Red Bull "Red Bull Vitamin Flavor Beverage" to compete head-on with Reignwood Group. In May 2020, Tencel Group also announced that it would invest 1.06 billion yuan in the Chinese market over the next three years and would build a new production plant in Huairou District, Beijing. At the same time, in order to deepen the Chinese market, a new company was registered in China.

In July 2023, Tencel Group held a groundbreaking ceremony for the production base of the Guangxi ASEAN Economic Development Zone, with a total investment of about 1.3 billion yuan and an area of 250 acres, marking the continuous increase of Tencel Group's investment in China. It is reported that this is the third factory directly invested by Tencel Group in China. At the 4th Consumer Expo, Tencel Group launched its first bottled Red Bull product in the Chinese market, and said that it has opened up more imagination space in consumption scenarios and created new business growth points.

It is worth noting that although the long-term struggle between Reignwood and Tencel has not reached the level of losing both, it has also consumed a lot of energy from their respective brand camps, especially China Red Bull, which previously dominated the energy drink market. According to data released by Euromonitor International, the market share of "China Red Bull" has dropped from 82.1% in 2012 to 53.3% in 2021, and the market share has dropped by nearly 30%.

In addition to Sino-Thai Red Bull, other domestic energy drink brands have accelerated their rise. Among them, Dongpeng Beverage is undoubtedly the biggest beneficiary. Shanghai Shenyin & Wanguo Securities Research Report pointed out that although Red Bull and Dongpeng are oriented to different consumer groups in terms of product positioning, the biggest benefit for Dongpeng is that the marketing and publicity of Reignwood Red Bull has almost stagnated, providing a rare window period for Dongpeng to quickly improve consumer awareness across the country.

NielsenIQ data shows that in China's energy drink market in 2022, Dongpeng Special Drink will maintain the first place in sales volume and second in sales. In addition, brands such as Lehu and Physical Energy are also seizing market share, and old beverage companies such as Coca-Cola, Wahaha, and Jianlibao have also entered the functional beverage market, and the industry competition has entered a white-hot stage.

Written by: Wang Jingjuan, reporter of Nandu Bay Finance Agency