---
title: "Chasing Red Bull, How Likely Is Eastroc to Succeed in Its IPO?"
description: "In 2019, China's functional beverage market experienced a turbulent yet seemingly calm transition. Since the Red Bull trademark case in June, the launch of Red Bull Anaji pushed the dispute to a climax, with discussions lasting over three months. Eastroc, the industry's second-largest player, is now pursuing an IPO, facing both opportunities and challenges as it aims to close the gap with the embattled Red Bull."
author: "澄韵"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2019-10-25"
categories: "Brand Marketing, Capital, Earnings & M&A"
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# Chasing Red Bull, How Likely Is Eastroc to Succeed in Its IPO?

> In 2019, China's functional beverage market experienced a turbulent yet seemingly calm transition. Since the Red Bull trademark case in June, the launch of Red Bull Anaji pushed the dispute to a climax, with discussions lasting over three months. Eastroc, the industry's second-largest player, is now pursuing an IPO, facing both opportunities and challenges as it aims to close the gap with the embattled Red Bull.

In 2019, China's functional beverage market experienced a period of upheaval, gradually moving through a slow, seemingly calm transition. Since the Red Bull trademark case in June, the launch of Red Bull Anaji pushed the dispute to a climax, with discussions lasting over three months before gradually subsiding.
On one hand, the war between Red Bull led by Reignwood Group (hereafter referred to as Old Red Bull) and Red Bull Anaji led by Thailand's TCP Group (hereafter referred to as Anaji) is an internal conflict, where both sides must leave room for themselves no matter how hard they fight.
On the other hand, until the law makes a ruling, this protracted war will continue, and minimizing losses is what both sides care most about. Therefore, both Old Red Bull and Anaji have remained relatively silent, focusing on the market, since making money is the ultimate goal, and the long-term battle tests patience and strength.
Thus, **in the first half of 2019, Reignwood sold another 15 billion yuan, with Old Red Bull contributing 13.8 billion yuan in sales, still firmly the industry leader.** Not only that, **Reignwood's War Horse brand has also surpassed the 1 billion yuan mark this year.**
Doesn't this make the industry's second and third players anxious? According to reports, in 2018, Eastroc sold 5 billion yuan, ranking second, while Lehu sold 3 billion yuan, and Red Bull's annual sales have remained around 20 billion yuan in recent years, showing a significant gap between them and the leader.
**-01-**
**Eastroc's Dark Horse Rise, Seeking IPO**
Recently, according to the CSRC, Eastroc Beverage (Group) Co., Ltd. (hereafter referred to as Eastroc) has completed its first phase of IPO supervision and has accepted guidance from Huatai United Securities. This means that since submitting its IPO application in June, Eastroc's listing plan has taken another step forward.
Tianyancha data shows that Eastroc's chairman, Lin Muqin, holds 56.85% of the company's shares; Jia Hua Capital's Tianjin Junzheng Investment Management Partnership (Limited Partnership) holds 10%, making it the second-largest shareholder; Shenzhen Kunpeng Investment Development Partnership (Limited Partnership) holds 7.36%.
According to reports, Jia Hua Capital has successfully invested in food companies such as Qiaqia Food, Jiajia Food, Laiyifen, and Babi Mantou, leaving classic investment cases in the consumer sector.
**From an obscure state-owned small factory on the brink of bankruptcy to today's industry leader with annual sales of 5 billion yuan and an IPO in sight, Eastroc is truly a dark horse that has turned the tables.**
Eastroc Chairman Lin Muqin
**In 2003, Lin Muqin, then the general sales manager, took over the state-owned enterprise Eastroc Beverage, which was on the verge of bankruptcy, and privatized it.** With nearly 10 years of experience in the beverage industry, Lin had a deep understanding of the industry and an unshakable attachment. Facing a beverage brand with many product categories but no distinctive features, he threw himself into it with great enthusiasm and began refined operations.
Controlling costs from the production source, **by the end of 2009, Eastroc Beverage achieved an output value of 250 million yuan, accumulating initial development capital.** That year, Lin saw the potential of the functional beverage market, developed differentiated products, and launched the bottled Eastroc with a dust-proof cap, a new era that continues to this day.
Due to the affordable packaging and price of bottled Eastroc, it quickly gained a foothold in the Guangzhou market. In 2013, Eastroc invited Nicholas Tse as its spokesperson and launched extensive brand promotion nationwide. Suddenly, product awareness and market share rose steadily, and Eastroc began to expand from Guangzhou to the whole country, never looking back. Sponsoring sports events, embedding ads in popular dramas, interactive promotions in new marketing, etc., Eastroc embarked on a path of true self-reliance and development.
Since 2016, with Red Bull, which holds 60% of China's functional beverage market share, embroiled in trademark disputes, Eastroc seized the opportunity to rise rapidly. **In 2018, Eastroc's market share was around 19%-20%, with sales exceeding 5 billion yuan, carving out a path for itself and firmly holding the second-place position.** With support from investors like Jia Hua Capital, its capital market plans may open new horizons for Eastroc.
**However, with the backing of capital, can Eastroc, facing the formidable opponent Red Bull, break free from its perennial second-place position and usher in its own moment of glory?**
At this juncture, Eastroc faces both opportunities and challenges.
**-02-**
**Endure the Hardest Times, and Opportunities Will Appear**
**Opportunity One: Red Bull's Internal Conflict, Uncertain Future**
For the Red Bull brand, which has been deeply rooted in China for over 20 years, this is certainly not its finest hour. Once dominating half of China's functional beverage market, **the Red Bull brand, which once stood alone, now faces its biggest crisis ever, and this crisis does not come from outside but from internal infighting.**
The brand owner, Thailand's TCP Group, and the actual operator of China Red Bull, Reignwood Group, are at odds. The Xu family and Yan Bin, who were once one family, have cross-shareholdings with intricate connections, but at the practical level, their conflicts of interest may not have been well resolved.
**Thus, after more than 20 lawsuits between the two sides without resolution, two Red Bulls have appeared in the market. Each sells its own products, ignoring each other openly while competing fiercely behind the scenes.**
Currently, Old Red Bull's market channels are deeply rooted and difficult to shake, while Anaji has begun to chip away at some, but it still needs time.
Will both sides let it go at that? Not necessarily.
This gives Eastroc a golden opportunity. The more intense the Red Bull conflict, the more leverage it gives competitors. The key is how Eastroc seizes it.
**Opportunity Two: The Path Ahead Is Clear, with Only One Opponent**
Before 2017, Eastroc might have been just one of many functional beverage products, but in 2018, the situation changed.
Eastroc has already traversed a 10-year path of breakthrough. Facing the fiercely competitive Chinese functional beverage market, Eastroc has overcome numerous obstacles and taken detours, but ultimately broke through the encirclement, leaving a host of similar brands behind with absolute advantage, securing the second-place position in the industry.
**For Eastroc, the path ahead is clear, and the opponent is facing a storm.**
**-03-**
**Is IPO an Opportunity or a Challenge?**
It must be said that Eastroc's choice to go public is quite courageous. Because the curse of listing in the beverage industry is too terrifying. IPOs always have unexpected issues. Corporate problems are magnified and exposed. In the past, Tiandi No.1 failed in its listing attempt. Another company, Six Walnut, has encountered troubles since listing, with performance stagnant for three years. Listing in the beverage industry is usually not smooth sailing. The same applies to Eastroc.
**Challenge One: Counterfeit Issues**
When it comes to counterfeit issues in functional beverages, no company is entirely innocent. It seems that without some connection to the big brother Red Bull, one would be embarrassed to claim to sell functional beverages. Eastroc has also walked the path of imitation. **From taste and packaging to even advertising slogans, traces can be found.**
Although it started with its unique plastic bottle design, Eastroc later launched canned products imitating Red Bull's gold can, even pricing them at 6 yuan to compete with Red Bull, but later adjusted back to 3.5 yuan due to poor results.
The advertising slogan was directly copied. Red Bull's earliest slogan, "Tired and sleepy? Drink Red Bull," once resounded across the country, but since 2013, it changed to "Your energy, beyond your imagination." Eastroc picked up Red Bull's old slogan, "Tired and sleepy? Drink Eastroc."
**Challenge Two: Insufficient Brand Influence**
Red Bull was the first to introduce the functional beverage concept to China and invested heavily in brand building and promotion. In consumers' minds, Red Bull is a high-end international brand, while **for Eastroc, the challenge is how a domestic national brand can stand out and shed labels like "rustic" and "cheap."**
Being an opponent to a giant is never easy. Red Bull's halo is too dazzling. Even War Horse, incubated by Reignwood itself, carefully nurtured with subsidies and sacrifices, has struggled. If War Horse has everything it needs, why can't it even come close to one-twentieth of Red Bull's success? Ultimately, consumers don't recognize the brand!
However, Eastroc, which is preparing for an IPO, is clearly unwilling to remain a follower of Red Bull. In recent years, Eastroc's positioning has shifted from its original large packaging and capacity targeting mid-to-low-end markets and lower-tier cities, gradually moving toward younger consumers.
Unlike Red Bull's sponsorship of sports events and sports brands, Eastroc has used film and entertainment marketing, collaborating with hit dramas like "The Mystic Nine" and "Eternal Love," successfully building awareness among young consumer groups.
Still photo from "The Mystic Nine"
However, even if Red Bull's market share is shrinking, Eastroc's second-place position is only one-quarter of Red Bull's sales. More "terrifying" is that competition in the functional beverage market has not ceased. Not only are domestic brands eyeing the market, but many foreign brands are also eager to enter. **Recently, it is said that Japan's Suntory and CITIC Group have established a joint venture in Shanghai to enter the functional beverage market.**
For Eastroc's development, going public means leveraging capital for multi-brand development, or breaking away from its low-end image to break into first- and second-tier cities or even expand internationally.
But the road ahead is long. Perhaps, as Eastroc itself says: **"First, strengthen internal capabilities; there is no timetable for listing at present."** Maybe Eastroc, while preparing for its IPO, is finding its answer. After all, even if the IPO succeeds, the road ahead will not be easier than now.
**Commentary by Wenshi: After Discarding 'Tired and Sleepy,' Red Bull Cannot Stop Eastroc's Pursuit**
In brand building, what is the biggest enemy?
**Xiao Masong says, the biggest enemy of a brand is having too many good ideas. Behind too many good ideas is that the more excellent the creative people, the more restless they are, and the less willing they are to follow the beaten path.**
From "Tired and sleepy? Drink Red Bull" to "With energy, unlimited" and "Replenish energy, full of vitality," Red Bull has changed its slogans many times. Since 2013, it has been "Your energy, beyond your imagination." But the one that truly resonates is only "Tired and sleepy? Drink Red Bull."
Red Bull has many good ideas, but the biggest problem this brings is that the best ideas don't get the longest persistence. Red Bull's brand managers once thought "tired and sleepy" was too vulgar and didn't match their first-brand image. So, they came up with "Your energy, beyond your imagination." It's elegant and lofty, but unfortunately, it can only be appreciated visually; spoken aloud, it doesn't sound like "human language."
"Tired and sleepy" is a huge scenario, and Red Bull's rise to the top owes much to this phrase. Now even the "a little tired and a little hungry" scenario has been explored by brands. Red Bull, which created this scenario, discarded "tired and sleepy" like a worn-out shoe, but Eastroc picked it up.
Some say Eastroc even copies Red Bull's slogans, lacking originality. But the market doesn't care about sophistication; it only cares about results. Consumers don't care about brand face; they follow their own mental patterns.
**A large part of China Red Bull's brand equity is carried by "Tired and sleepy? Drink Red Bull." Red Bull abandoned it, and Eastroc picked it up—this is a huge asset.** Those who can deeply understand the value of "tired and sleepy," set aside their pride, and make this decision show rare insight and courage.
Red Bull may have a thousand valid reasons to prove that discarding "tired and sleepy" was correct, but it cannot stop Eastroc's rise and pursuit. Eastroc, which picked up "tired and sleepy," has already used it to reach 5 billion yuan in sales, becoming a "small giant."
If it can successfully IPO and continue to focus solely on the uncreative message of "tired and sleepy," the ambitious Eastroc indeed has a good chance of catching up with the infighting Red Bull.
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## Citation metadata

- Publisher: New Distribution
- Author: 澄韵
- Published: 2019-10-25
- Canonical: https://xinjignxiao.com/en/articles/chasing-red-bull-how-likely-is-eastroc-to-succeed-in-its-ipo-12849e46/
- Original source: https://mp.weixin.qq.com/s/tnCh7272DQsHUHWzHcgCxw

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