Image source @ Visual China
Wen 丨 Suning Institute of Finance, author 丨 Lu Shengbin
"Often use the brain, drink six walnuts", this brainwashing classic advertising slogan is deeply rooted in the hearts of the people, the six walnuts from the local brand in Hebei into a national well-known trademark, the fire throughout the north and south of the river seems to be overnight, but also let Yangyuan beverage become The leading enterprise of plant protein beverages in China.
Yangyuan Beverage's operating income soared from 280 million in 2008 to 9.12 billion in 2015 (see Figure 1), and in just seven years, the scale has swelled 32 times, and the popularity of six walnuts can be seen.
2015 was a feng shui mountain for Yangyuan Beverage, and since then the operating income has gradually declined. In 2020, affected by the epidemic, the operating income shrank to 4.43 billion, which was directly cut compared with the high level.
In 2018, Yangyuan Beverage landed on a share with the aura of "the country's largest walnut milk enterprise" (see Figure 2), but the listing was the high point that made investors disappointed, and there was a sense of déjà vu that debuted and peaked. Entering the capital market has not become an opportunity for the second growth of Yangyuan Beverage, and the company's operation has not improved.
The main product of Yangyuan Drink is walnut milk, which is six walnuts. Walnut milk is made of high-quality walnut kernels and purified water as the main raw materials. From the perspective of the cost composition of Yangyuan Beverage (see Figure 3), direct materials account for more than 85% of the cost; interestingly, the amount of raw materials purchased by the company every year accounts for more than half of the cans. The cost price of the can is more than 2 times that of walnut kernels, which is quite anti-customer-oriented, but the thickness of the can is matched with the gift attributes of six walnuts.
Some people may not know that there is no milk in walnut milk, and the protein content in it comes entirely from walnuts, so walnut milk is an alternative product to milk and belongs to a kind of plant protein drink.
Plant protein drink is a milky liquid drink with plant protein as the main body made by processing plant nuts and pulp as the main raw materials. Compared with animal protein drinks (such as milk, etc.), plant protein drinks have lower cholesterol content, are rich in protein and amino acids, and have a moderate amount of unsaturated fatty acids, which meet the health needs of today's consumers, with the younger generation of consumers receiving plant protein drinks the most.
In addition, plant protein drinks are also more environmentally friendly. According to data from the Food and Agriculture Organization of the United Nations, livestock accounts for 14.5% of global emissions, and every kilogram of plant-based products produced saves 96% of land resource waste and destruction, 87% of domestic water and 89% of greenhouse gas emissions for the environment.
The golden development period of Yangyuan Beverage is inseparable from the help of the industry. According to the statistics of China Industry Information Network, from 2007 to 2016, the compound growth rate of plant protein beverages in the past ten years reached 24.5%. In recent years (see Figure 4), the scale of the plant protein beverage industry has fluctuated, and in 2020, it was affected by the epidemic and fell by 2.5% year-on-year.
The main products in the plant protein beverage industry can be divided into walnut milk drinks, almond milk drinks, peanut milk drinks, coconut juice drinks, soy milk drinks and other varieties according to different raw materials.
At present, the domestic plant protein beverage market is very fragmented, and there are leading enterprises in various sub-industries. In addition to the walnut milk of Yangyuan Drink, Chengde Lulu's almond milk dominates, the soy milk of Weiwei shares is the most well-known, and the Hainan coconut milk that "drinks from small to large" is well-known, and the silver heron peanut milk is also familiar to everyone. Therefore, there is no comprehensive plant protein beverage enterprise with monopoly position in China, and the market competition is fierce. In 2020 (see Figure 5), the market share of walnut milk was 9.5%, which is relatively niche.
Looking forward to the future, the development prospects of the plant protein beverage industry are still worth looking forward to.
One. At present, the per capita consumption of plant protein drinks in China is only 3.2 kg, which has a large gap compared with developed countries. With the improvement of China's consumption level and health awareness, the trend of plant milk replacing animal milk will continue, and plant protein drinks that are more friendly to the body will be promising. It is estimated that in 2020, the sales of plant protein drinks in the United States will account for one-fifth of the overall scale of dairy products, and if China reaches such a proportion, then there is room for doubling the size of the industry.
Two. Plant protein drinks have the characteristics of low cholesterol, lactose, fat content, etc., favored by vegetarians and lactose intolerant populations, coupled with the strengthening of global environmental awareness, the stickiness of plant protein consumer groups will be higher. The younger generation has higher and higher requirements for the quality of drinks, from "good drink" to "drink well", so in order to capture the hearts of the new generation of consumers, the upgrading of products cannot be delayed, and high-end upgrades will lead the rapid growth of various segments.
Riding on the east wind of the industry and embracing the successful "six walnuts", Yangyuan Beverage developed rapidly before 2015. But in recent years, the leading position of Yangyuan Beverage in walnut milk has not been as strong as imagined. It has been estimated that the market share of Yangyuan Beverage in the walnut milk segment reached 66% in 2019, and has fallen to 41.2% in 2020. Overall (see Figure 6), the market share of Yangyuan Beverage in the entire plant protein beverage is also declining year by year, from 8.3% in 2015 to 3.6% in 2020, which is called Waterloo. In the case of a slight increase in the scale of the entire plant protein drink, the operating income of Yangyuan Beverage has been declining, and the roe is also a cliff-like decline, which has to make us wonder: What is wrong with Yangyuan?
One. The brand is too single
Previously, six walnuts were the only strategic big items of Yangyuan Beverage, and unlike the product positioning of Chengde Lulu, more than 70% of the six walnuts belonged to the gift attribute. The brand of six walnuts has aged significantly in recent years, and after the classic advertising words have been shouted for more than a decade, consumers have also experienced aesthetic fatigue, and even questioned whether "six walnuts are collecting IQ tax". Wanting to "eat all over the sky in one trick" is a bit of a sitting and eating mountain.
The glory of "six walnuts" has passed, and in order to achieve the glory of the past, it is necessary to innovate and create more competitive new products. In order to get rid of the current predicament, it can be seen that Yangyuan Beverage is working hard to cope, although the sales revenue is deteriorating, but since 2018, the company has increased its investment in research and development against the trend (see Figure 7) and pushed it into a new one. In 2020, the R&D expenditure is close to 60 million, while the annual R&D expenditure of Chengde Lulu is more than 10 million.
At present, the company has launched high-end products "six walnuts 2430", little red people, daily Yangyuan, etc., of which Daily Yangyuan takes soy milk as the entry point, and is expected to become the second largest strategic single product of Yangyuan. Unlike the six walnut gift attributes, Daily Yangyuan focuses on the concept of a healthy drink.
In order to reoccupy consumer minds, Yangyuan Beverage has comprehensively upgraded the packaging visual system for new products, but how well the market acceptance is still to be tested.
In September 2020, Yangyuan Beverage began to try to diversify its business, cooperating with Red Bull to distribute Red Bull Anegi Beverage and signing a contract with French Vegetarian Sprouts. However, objectively speaking, Red Bull Annegi Beverage accounts for about 5% of the market share of domestic Red Bull products, which cannot have a substantial impact on Yangyuan.
Two. Single marketing method
The sales model of Yangyuan Beverage has distribution and direct sales (see Figure 8), under the distribution model, the company's products are sold directly to distributors through sellout, and then sold by distributors to retail terminal operators, and finally sold directly to consumers by retail terminals.
Yangyuan Beverage focuses on rural routes, and its sales network penetrates into townships, but it has not improved in first- and second-tier cities. In 2020, the offline sales of six walnuts accounted for more than 98%, of which the county-level market below the market can account for more than 70% of the sales.
Since the beginning of this year, Yangyuan Beverage has begun to attach importance to Internet marketing, and has begun to promote it on e-commerce platforms such as Pinduoduo and Douyin. Began to implement the strategy of "rural encirclement of the city", in-depth cooperation with CCTV, successfully selected as the leading brand of the "CCTV Brand Power Project" in 2021, laid out the LED large screen in more than 300 high-speed rail stations across the country, and the elevator advertisement in 100 cities in 28 provinces across the country. By continuously promoting brand building and continuously enhancing brand value, the current product sales volume has returned to the same period level in 2019.
Three. External competition is fierce
The entry barriers of the plant protein beverage industry are low, so the number of enterprises in China is large, and the substitution between products is strong. From soybeans to oats, everything can become "milk", at present, the major domestic products are lined up, the crowd rises together, in each subdivision of the track, the market share of leading enterprises can reach more than 50%, but they are in a state of mutual competition.
At the same time, foreign "catfish-type" companies also want to share a piece of China's plant protein beverage industry. In 2018, Sweden's oatly's oat milk entered China and was quite popular in first- and second-tier cities; recently, The potato milk of Lund Vegan Company in Sweden has also officially entered the Chinese market. More emerging products continue to bring impact to Yangyuan, especially the recent rise of oat milk, which not only encroaches on the market of other segments, but also compresses the growth space of walnut milk.
Third, the traditional dairy giants are not tied to death, Yili, Sanyuan, etc. have also launched new plant milk products, more and more entrants, Yangyuan may also need to let the market know: choose so much, why choose walnut milk.
It can be said that Yangyuan Beverage is on the road to breaking the game.
Note: The market is risky and investment needs to be cautious. In any event, the information contained in this subscription account or the opinions expressed are for the purpose of exchanging views and do not constitute investment advice to any person.