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French food and beverage giant Danone has recently reached an agreement with Yingtou Holdings to transfer six Robust plants located in Guangzhou, Beijing, Tianjin, Chengdu, Chongqing, and Zhongshan, along with employees engaged in the Robust brand business, to Yingtou Holdings. The "Connection" Between Danone and Robust Robust was one of China's top ten beverage companies, one of the second batch of key large enterprise groups in Guangdong Province, and ranked first among the top fifteen industrial enterprises in Zhongshan. It was also one of the few well-known trademarks in China's food and beverage industry recognized by the State Trademark Office. Robust once had a rich product matrix, with health products, dairy products, and beverages as its major brands. Robust milk, AD calcium milk, Robust purified water, and mineral water were all well-known product lines under the brand. However, currently Robust only retains the single business segment of drinking water. In March 2000, French Danone Group acquired 92% of Robust's equity in one go, becoming the largest shareholder. However, Danone failed to strengthen the Robust brand; instead, it gradually pushed the brand into decline due to its inability to leverage multinational management and coordination capabilities. It is reported that after Danone took over Robust, internal conflicts between old and new employees persisted, and Danone failed to accurately gauge the Chinese consumer market. As a result, multiple business segments were gradually stripped away, leaving only the drinking water business. Danone publicly reflected, "We made mistakes on the Robust issue." According to Robust's official website, its current product line includes only purified water, mineral water, and mint water, in addition to barreled water. The water sources are concentrated in Beijing and Chengdu. As for the plant layout, Robust's official website does not specify. Why did Danone suddenly sell Robust after more than a decade? In response, Danone stated, "To establish a strong and sustainable business model in the Chinese market, Danone has adjusted its drinking water business development strategy in China," adopting a more focused development model, concentrating on the natural mineral water business, and therefore decided to sell the entire Robust business to Yingtou Holdings. After divesting Robust, Danone still holds brands such as Evian, Yili, Badoit, and Volvic in China's water market. New Owner: Yingtou Holdings According to the National Enterprise Credit Information Publicity System, on October 23, 2016, the shareholders of Robust (Guangdong) Drinking Water Co., Ltd. changed from Danone and Anji Investment to Yingtou Holdings, Jianian Industrial, and Shenzhen Qianhai Furong Asset Management Co., Ltd. Upon inquiry, Yingtou Holdings Co., Ltd. is located in Futian District, Shenzhen, established in 2004 with a registered capital of RMB 200 million. Its business scope covers banking, high-tech, leasing, lending, real estate development, property management, and mining. A recruitment advertisement published online this year stated that the company's total assets are nearly RMB 4.5 billion, holding equity in three listed companies. Among its core enterprises, one is a national high-tech enterprise, and one is a Shenzhen high-tech enterprise. It owns the national well-known trademark "Angel" and the well-known brand "Jianian Printing." Robust will become a wholly-owned subsidiary of Yingtou Holdings, serving as a core component of the drinking water business and achieving synergy with "Angel." According to estimates by a financial institution, Angel's sales in 2015 were around RMB 200 million. The "Past and Present" of Robust

In 1989, Robust founder He Boquan and four partners used RMB 950,000 funded by the town government to establish "Zhongshan Robust Health Products Co., Ltd." in a small office of less than 10 square meters. They collaborated with Sun Yat-sen Medical University, South China University of Technology, Guangdong Pharmaceutical University, and Guangzhou Institute of Microbiology to develop "Robust" yogurt drink.

In 1992, Robust's output value reached RMB 80 million. In October of that year, the predecessor of Robust Group, Guangdong Today Group, was officially established.

In 1993, Robust became the number one brand of yogurt drinks nationwide.

In 1997, Today Group invested heavily to fully acquire Guangzhou Robust Company, becoming the sole legal owner of the "Robust" trademark.

In 1999, Robust's annual sales reached RMB 2 billion. In October of that year, Today Group was officially renamed Robust Group.

In March 2000, French Danone signed an agreement with China Robust to jointly invest in the establishment of "Robust (Guangdong) Food and Beverage Co., Ltd." Danone acquired 92% of Robust's equity, becoming its largest shareholder. It is said that Danone's offer was as high as USD 2.38 billion (approximately RMB 19.7 billion).

However, the clash of Chinese and foreign management philosophies caused great turmoil in Robust. Just one year later, the five founding members led by He Boquan (He Boquan, Yang Jieqiang, Wang Guang, Li Baolei, Peng Yanfen) were successively ousted.

In 2005, Robust suffered losses of RMB 157 million.

In 2006, Danone began large-scale "structural adjustments," laying off nearly 30% of sales personnel.

At the same time, Robust's product line shrank significantly, with many categories withering away. In 2013, "Robust (Guangdong) Food and Beverage Co., Ltd." was renamed "Robust (Guangdong) Drinking Water Co., Ltd.," announcing that only the drinking water business would be retained. Danone's biggest success after taking over Robust was the launch of Mizone. Leveraging the event marketing of the SARS epidemic, Mizone, with vitamins as its main concept, became an instant hit. Shortly after its launch, sales reached RMB 700 million in 2004, and by 2015, revenue soared to RMB 9.2 billion. However, as the food and beverage business was gradually "handed over" to Danone, the connection between Mizone and Robust was diluted and stripped away. On Mizone's packaging, consumers cannot even find any relationship between Mizone and Robust. In fact, Danone's sale of Robust is not the first time it has divested underperforming businesses. Last year, Danone announced the sale of all equity and trademark rights of Dumex China, which had suffered huge losses due to the Fonterra botulism incident, to Yashili, whose largest shareholder is Mengniu and second largest is Danone. Notably, Danone calculated that the sale consideration was used to increase its stake in Mengniu by 2%. In other words, Danone shed the loss-making Dumex China and in return gained equity in China's dairy giant Mengniu! With the overall sale of Robust this time, another case of a multinational company failing to integrate a local brand has been added. Danone spent 16 years but failed to digest the "Robust" brand, which once represented the top level of China's beverage industry. Whose fault is it? Can Robust, now back under local ownership, regain its vitality? References: Xiaoshidai, Beijing Business Today, Food Board