Click 'Read Original' for details**** Since Dongpeng Tequila's listing a month ago, its stock price has drawn much attention, not surprisingly, first with a majestic rise of 5 times, then a thrilling overnight drop of 7%, plus Dongpeng being the first Chinese local functional beverage brand to go public (as media评价), this roller-coaster of information should rightly make it a trending topic in the FMCG industry. However, stock prices are a matter for capital, so let's leave that to capital. Compared to stock prices, the issues behind 'the first Chinese local functional beverage brand to go public' seem more worthy of our research and analysis—what is the critical significance of Dongpeng's listing for the entire industry? Does it mean that functional beverages are about to enter the next cycle of competition? In which direction will functional beverages develop in the future?...... Only from the perspective of the industry's 'history' can we find the truth more objectively and comprehensively. Even if history cannot provide us with 'experience', it can provide us with 'coordinates', showing where an enterprise or an industry comes from and where it is going. Pioneering Why does Red Bull hold a 60% market share, while Dongpeng, with less than 20%, gets there first? This needs to be traced back to Red Bull's history. Red Bull's founder was actually a Thai businessman named Xu Shubiao. When he founded Red Bull in 1966, his initial purpose was to provide a beverage that could keep local workers, drivers, and others who worked overnight awake. To promote Red Bull, Xu Shubiao adopted a strategy of 'surrounding the cities from the countryside', giving free samples to truck drivers and night-shift workers, first seizing the market outside Bangkok, avoiding direct competition with other companies in the Bangkok market. As blue-collar workers widely accepted it, Red Bull quickly sold well in Thai cities. So next, Red Bull faced a business challenge that almost all brands experience. How did it get out of Bangkok and shine in the international market? The answer is very simple—meeting a benefactor. In 1982, Red Bull's 'benefactor' appeared. Austrian Dietrich Mateschitz was on a business trip to Asia and unexpectedly discovered that 'Red Bull' was effective in alleviating jet lag. Subsequently, Mateschitz went to Thailand to find Xu Shubiao, hoping to bring 'Red Bull' to the world. The two hit it off. In 1984, Xu Shubiao and Mateschitz jointly founded the Red Bull Group, and Mateschitz changed Red Bull's market positioning, positioning it as a 'sports' high-end beverage rather than a low-end beverage for blue-collar workers. In 1987, when 'Red Bull' was launched in Austria, the initial venues were ski resorts in Austria. Subsequently, it sponsored various sports and sporting events, including the highly influential F1 racing. Meanwhile, a Chinese businessman who had been working in Thailand since he was 16—Yan Bin—had already become a real estate tycoon in Thailand. Under some opportunity, Yan Bin approached Xu Shubiao, wanting to introduce this magical beverage to the Chinese market. In December 1995, Yan Bin obtained the operating rights for Red Bull in China from Xu Shubiao, and quickly set up a factory in Shenzhen the same year, making Red Bull one of the earliest functional beverages that Chinese people came into contact with. There is a rumor that the operating rights Yan Bin obtained were for 20 years, expiring in 2016. Many worried that the 'Wanglaoji JDB' incident would happen to Red Bull, but in fact, our worries were unnecessary. In the long run, Red Bull was not affected at all. As the first functional beverage at that time, Red Bull's development in the Chinese market was quite smooth. Meanwhile, in the 1990s, as the Chinese delegation began to shine at the Olympics, people's attention to sports reached an unprecedented level. Yan Bin followed the Austrian company's approach, sponsoring sports teams and sporting events domestically. Even at that time, most people mistakenly believed that Yan Bin sponsored F1 events. Imperceptibly, Red Bull's high-end brand image formed an unbreakable perception among consumers, laying a very solid foundation for Red Bull's high price point of 6 yuan. Next, Red Bull entered a phase of sustained and stable growth. In the business world, when a new category has been validated and a giant has emerged, followers are bound to come. Dongpeng Tequila and Dali Lehu are the next protagonists. Prologue Dongpeng was officially taken over by Lin Muqin in 2003, but at that time, Dongpeng was on the verge of bankruptcy. Fortunately, Lin Muqin had been deeply involved in the beverage industry for 10 years. Lin Muqin then spent nearly another 10 years, through extreme internal detail management, from taking over Dongpeng Beverage in 2003 and privatizing it to around 2010, increasing the company's output value from 15 million yuan to 250 million yuan, providing the initial capital accumulation for Dongpeng to later become the 'first functional beverage stock'. In fact, before 2010, Dongpeng's product structure was not finalized, with many categories, unclear product characteristics, and insufficient market competitive advantages. It mainly relied on cost control and deep cultivation of the Guangdong market for development. The 'saving money' strategy could save the company, but it could never make it big. So in 2009, Lin Muqin locked onto functional beverages as a breakthrough and made a series of very key moves—

  • Used PET plastic bottles and designed dust-proof caps
  • Differentiated pricing, at the 3 yuan price point Using PET packaging mainly served two purposes: first, to directly differentiate from Red Bull's aluminum can packaging, and using the dust-proof cap design to create a direct memory point for consumers about Dongpeng Tequila; second, to reduce costs. An aluminum can costs about 1 yuan, but PET might only cost a few cents, which was Lin Muqin's consistent style. There are also several hidden points here: why didn't Red Bull directly use PET plastic packaging at the beginning?—
  • From a material perspective, because aluminum's insulation, heat insulation, and sealing properties are many times stronger than PET materials, aluminum cans can better maintain the original taste and flavor of the beverage than PET plastic packaging.
  • From a transportation perspective, aluminum materials are less likely to deform or be damaged during transportation, minimizing uncertainties in the process from production to sales terminals.
  • From a strategic perspective, Red Bull, as the industry leader at the time, with stable and growing sales, could 'control' the aluminum packaging in the supply chain. At the same time, through the procurement of aluminum packaging, it could treat packaging as 'futures', theoretically helping the company earn extra money to some extent, but PET cannot achieve this at this level. The low price point is the key strategy that enabled Dongpeng to become the second-largest functional beverage brand. Red Bull aimed high to seize the high-end market, so Dongpeng took the civilian route, a path in line with China's national conditions, just like Red Bull in Thailand at the very beginning, going to the blue-collar workers, to the working class, surrounding the cities from the countryside. You see, strategies are always surprisingly similar, but the tactics are vastly different. Speaking of which, we must mention Dali Lehu. In 1998, Dali launched Lehu. Although it also adopted a low-price strategy, Lehu's overall packaging was modeled after Red Bull's products. As is well known, Dali Food's most adept business strategy is the follow strategy. When it discovers a new product type that has been tested by the market and has sufficient space and profitability, it quickly follows into that category. In fact, relying on the channel system built by the Dali Group over the years, Lehu should have firmly held the second position. However, under Dongpeng's innovative strategy, it could only hover in third place for a long time. Recently, it also attracted a fine of over 30 million yuan for publishing false advertisements. This may be the 'aftereffect' of losing innovation motivation after following strategy. Current Status In addition to Red Bull, Dongpeng, and Lehu, the turmoil and impact caused by the SARS epidemic in 2003 also gave many other functional beverages a huge opportunity. After SARS, the national health awareness was elevated. Vitamin functional beverages led by Wahaha's 'Activate', Nongfu Spring's 'Scream', and Danone's 'Mizone' quickly occupied the youth market. In just one year, Activate's sales reached 300 million yuan, and Mizone's sales reached 700 million yuan, closely approaching Red Bull's 1 billion yuan sales. After 2003, the categories of functional beverages began to undergo subtle changes, gradually differentiating into 'vitamin beverages', 'energy beverages', 'mineral beverages', etc., and later further subdivided into 'amino acid beverages', 'glucose beverages', etc. It wasn't until 2015 that the segmentation of functional beverage categories gradually stabilized. On the surface, it was enterprises innovating in raw materials and ingredients, but in essence, it was changes in consumer demand, leading to an increase in consumption scenarios. This caused the competitive track to no longer be between brands of the same category, but expanded to competition for consumer needs. Consumers even learned to distinguish that during exercise, they need to drink different beverages at different stages, whether to drink electrolyte beverages to replenish electrolytes, or taurine beverages to relieve fatigue, or mineral beverages to adjust mental state...... So even though Red Bull reached its peak of 23 billion yuan in 2015, and Lehu and Dongpeng were close to the 5 billion mark, they were still closely pursued by 'Mizone' with 9.8 billion yuan the same year, with no chance to catch their breath. Mizone even began emphasizing 'functionality' from 2018. Huabin brought out 'War Horse' to respond and launch new competition. To this day, it has achieved quite good results. Besides quickly breaking through 1 billion in sales, you will find that War Horse's brand awareness is also quite high. The main reason is that 'War Horse' did not blindly expand distribution relying on Huabin Group's channel advantages, but focused on controllable outlets, mainly core terminal outlets, and seized consumers' attention to basketball events, focusing on core scenarios, cultivating loyal consumers online and offline—focusing on consumers' core needs. The functional beverage industry, and even the entire FMCG industry, has begun to shift from obsessing over the product itself to focusing on consumer needs. This is the most essential change in the business world over the past 10 years. Not only that, but at this stage, to meet consumer needs, enterprises must master the way to communicate with consumers, and consumers will become extremely sensitive. So you will find that with the rise of internet thinking in 2015, the 'channel advantages' that most enterprises relied on gradually lost their effect. The 'content capability' needed for enterprises to communicate with consumers became the core competitive capability in the internet era. The biggest difference from traditional industry competition is that in the past, enterprises produced products, distributed them to terminals, and sold them to consumers—the 'goods-place-people' model. In the internet era, it has become a 'people-place-goods' model where enterprises first have a group of core fans, and whatever the fans need, the enterprises produce, to meet consumers' needs in different scenarios. This has changed consumers' consumption patterns from 'searching for what I want' to 'seeing what good recommendations are available'. Genki Forest is a typical representative of using internet thinking to do FMCG in the internet era. The most different way of thinking from the traditional beverage industry is— Almost all beverage enterprises are doing one thing: I make beverages for you to drink. Almost no enterprise seriously thinks about: what do you want to drink, and I'll make it for you. A few years ago, someone said that all industries in China are worth redoing. In fact, if the beverage industry wants to redo it, it must figure out what people who drink beverages now want to drink, or you must redefine the beverage industry. The reason Genki Forest can have this thinking is also because it originally came from the internet industry. Genki Forest's founder, Tang Binsen, originally came from the gaming industry. After selling his company, after a brief adjustment, he founded Genki Forest in 2016. Although the cross-industry leap was big, Tang Binsen grasped the key factor of 'people'. With internet and technology genes, and with user value at the core, he built a collection and feedback mechanism for business flow and information flow, using efficient data processing capabilities to empower enterprise operations. Tang Binsen often says: make beverages like making an APP. Translating this sentence means: the key to making good beverages is how to build your data competitiveness. Instead, it built a new track faster than most FMCG enterprises still exploring internet transformation, and within 3 years, it had the right to define this track, thereby mastering pricing power. Using the new concepts of 'bubbles' and '0 sugar, 0 calories', it locked onto young people with spending power. Through fan stickiness, it gradually opened up offline channels, extending from high-cost channels to civilian channels, completely 'opposite' to traditional enterprises. So the Alien functional beverage launched by Genki Forest, besides meeting needs in scenarios like sports and fitness, more importantly, the product plays a social role among consumers. Strong fan stickiness will make the Genki Forest brand the 'default' beverage in social interactions for a certain group of people, representing circles, youth, and even values. This is something many traditional brands cannot achieve, but it will also be the basic operation for traditional brands to reach a higher level in the internet era. Future Following the SARS epidemic in 2003, the COVID-19 pandemic in 2020 will elevate the 'health' demand to another level. On the surface, we see that most products, including functional beverages like Dongpeng, have launched '0 calorie, 0 sugar, 0 fat' products to respond to this health trend, but the real crisis is lurking behind. Practitioners in the beverage industry are actually well aware that the so-called '0 calorie, 0 sugar, 0 fat' is 'catering' to consumer needs. Why say 'catering'? Because consumers do not yet know that besides high sugar and high carbohydrates, the most harmful to health are additives. Moreover, since energy beverages currently lack effective industry monitoring standards, there are gaps in the entry threshold and ingredient amounts for functional beverages, so behind '0 calorie, 0 sugar, 0 fat' there are still many hidden health needs. This is also one of the factors hindering industry development, and it is also a pain point that most functional beverages dare not raise. Moreover, the current 'health demand' is a pseudo-demand defined by consumers themselves, not a real demand that current products can truly solve. This challenge still needs the entire industry to solve over a considerable period, but at least the future direction is clear. From a longer-term perspective, when 'health' demand becomes a national consensus, brands will eventually have to compete at a larger demand level. In the future, functional beverages can develop in three directions to find competitive barriers suitable for their own brands— 1. Data and Technology This point comes from the inspiration of 'Genki Forest'. In fact, for traditional enterprises, how to obtain key data from their close contact with consumers through interaction and cooperation with distributors is the key to the internet transformation of traditional enterprises. Knowing what consumers are thinking, doing, and needing is itself a problem that data solves. The reason to link data with technology is that enterprises must always be clear about what consumers want and whether we can achieve it. 0 sugar, 0 calories, 0 fat satisfies consumer needs, but at the cost of product taste and flavor. If you can solve this problem through technology, you can open up a new track like Genki Forest and establish a long-term competitive barrier. 2. Lifestyle The functional beverage category will not only be sports vitamin beverages represented by Red Bull, but will extend to people's lifestyle needs, such as enhancing immunity, relieving fatigue, improving sleep, and even helping with mental health and stress reduction. When Britain and the United States first entered the industrial era, due to rapid economic development, people's living standards rose sharply, but it also led to people's inability to adapt to this fast pace of life, resulting in widespread mental health problems, from mild anxiety to severe depression, giving Coca-Cola a huge opportunity. China's development speed over the past nearly 40 years has been even faster than the industrial era of Britain and the United States. The fast-paced life has also made many Chinese people begin to feel lost and anxious. Whether psychologically or physiologically, a solution is needed, which is a huge opportunity for future functional beverages. The reason it is called a lifestyle need is that we are all unwilling to admit that our mental health has problems. We need to cleverly guide people to make 'changes' through the concept of 'lifestyle'— On the one hand, through long-term construction of a 'lifestyle' belonging to the brand or product itself, giving the product connotation through storytelling is the gentlest and most effective way to heal mental health; on the other hand, lifestyle will become a symbol of the brand, representing the brand's proposition and solutions. 3. Becoming Social Currency Loneliness is the norm in this era. People go to the gym, exercise, and do everything to become better, all to become part of a group and avoid loneliness. So beverages cannot just be beverages; they need to become a role, a prop in people's lives, even helping them express themselves, build their image, and become a member of a group. In this way, enterprises must learn to communicate with their precise users, speak their language, discuss their topics, and then use your products to help them create topics. If a product cannot become social currency for consumers, then internet transformation is meaningless. Past, present, and future, every brand has left its mark, recording the real business battlefield with facts. Whether it still exists or not, we must use their spirit as strength to write the future. As mentioned at the beginning of the article— Only from the perspective of the industry's 'history' can we find the truth more objectively and comprehensively. Even if history cannot provide us with 'experience', it can provide us with 'coordinates', showing where an enterprise or an industry comes from and where it is going.**** But the history I see alone cannot and will never be the full truth. I hope you can supplement it, even if it's just the tip of the iceberg, it can bring us closer to the truth and make our self-awareness clearer. Review: Asher -END-