"You can often see Dayao in restaurants, and I occasionally drink it with meals because it cuts through grease, but in supermarkets or convenience stores there are too many drink options, so I rarely choose Dayao proactively." For Li Zan (pseudonym), Dayao, a beverage brand often seen on huge billboards on streets and alleys, is just an occasional choice during meals. This may not be the result Dayao wants, at least not now. This carbonated beverage brand from Inner Mongolia initially gained volume through small restaurants and BBQ shops, capturing the dining market ignored by international carbonated giants Coca-Cola and Pepsi, and in 2022 sold over 3 billion yuan of fruit-flavored carbonated water. From encouraging distributors to go south to building production bases nationwide, Dayao is moving to a bigger stage. Recently, it was reported that Dayao Beverage is preparing for an IPO in Hong Kong as early as the second half of 2025, currently in contact with consulting agencies, with an expected fundraising of up to $500 million. In response, Dayao Beverage said the company is focused on operations and development and has not considered an IPO for now.
Focusing on the dining channel, after establishing consumer awareness, then entering KA and community convenience store channels, is Dayao's usual approach. Small dining establishments made Dayao, but with over 80% of revenue coming from the dining table, for a beverage brand, it's like moving forward on one leg. Within its comfort zone, Dayao is a "carbonated beverage dark horse" that has gone from a corner to the national market, but the reality is that as the beverage market enters red ocean competition, it has to step out of its comfort zone.
From Inner Mongolia to the whole country, targeting young people At the beginning of this year, Dayao also broke into the film industry. As a co-promotion partner for the Spring Festival blockbuster "Detective Chinatown 1990," Dayao invited fans to watch the movie for free on its official Weibo, celebrating the "big soda start to the year." Currently, "Detective Chinatown 1990" has grossed over 3 billion yuan. During the Spring Festival, Dayao released three New Year short films that started from the scene of returning home for the New Year, showing how Dayao helps young people handle awkward conversations with relatives. Almost at the same time, the landmark big screen at Sanlitun in Beijing was also occupied by Dayao ads, focusing on simultaneous exposure online and offline. This is in line with Dayao's consistently high-profile marketing style. When Wang Qingdong, chairman of Dayao Beverage, first acquired the Bayi Beverage Factory (predecessor of Dayao Food Factory), he probably didn't imagine that a not-so-new orange-flavored soda could now go across the country. As early as 2014, the company's senior management determined Dayao's future business direction: one was to focus on the dining channel, and the other was to do national brand operation and channel expansion. At that time, in Inner Mongolia's dining channels, besides the "two colas," there was no suitable drink for meals, so this crack allowed Dayao to break through. The real turning point came in 2021. With the support of super symbol marketing company Hua & Hua, Dayao launched a brand marketing upgrade, creating the concept of "big soda," and the following year signed national movie star Wu Jing as spokesperson. As an instant consumer product, beverages need more convenient and frequent access. So from subway stations, elevator lobbies, supermarkets, to CCTV prime time, e-commerce, and new media channels, Dayao soda ads with Wu Jing's iconic smile almost formed a screen-brushing trend. According to data disclosed on Dayao's official WeChat account, in the summer of 2024, Dayao heavily invested in subway ads in Beijing, "In 2024, Dayao brand ads landed on 80+ subway stations and 270+ points in Beijing, with an estimated 1.6 billion exposures." Throughout 2024, Dayao brand ads also covered core subway advertising positions in eight major cities: Xi'an, Qingdao, Wuhan, Chongqing, Beijing, Hohhot, Chengdu, and Jinan, with over 4.27 billion exposures, and also landed on airport media prime positions in Xi'an, Zhengzhou, and Harbin, with over 35.8 million exposures. Initially, by binding with dining scenarios, Dayao became a "meal partner." Now, Dayao hopes to attract more young consumers through trendier marketing. For example, in April 2024, Dayao increased the juice content of its classic "big soda" products but kept the price unchanged, and also added a 520ml large glass bottle of Ice Cool (pineapple) flavor to its classic carbonated series. In response to young people's demand for healthier drinks, Dayao also launched a 0-sugar soda series and a 0-sugar, 0-fat, 0-energy Chayuanxiang oolong tea series, entering the sugar-free tea track. Previously, Dayao executive director Luo Yun summarized the brand's product logic: first, focus on big single products; second, optimize products and services to meet consumers' demand for "0 sugar, 0 fat, 0 calories"; third, expand into fruit and vegetable juices, plant protein, and functional beverages, and develop glass bottles, PET, cans, and other packaging forms based on channel expansion. With its dominance in the dining channel and high-profile marketing strategy, in 2022 alone, Dayao's annual revenue exceeded 3.2 billion yuan, ten times the sales of Shaanxi regional beverage brand Bingfeng.
Shrimp soldiers and shrimp generals, parting ways In fact, Dayao's earliest entry into the dining channel relied on giving profits to distributors and winning over small restaurant owners with relationship maintenance. Its early purchase price was very low: the classic 500ml glass bottle of Dayao soda was only 1.4 yuan to 2.3 yuan per bottle, plus empty bottle exchange for gifts, etc., with a single bottle gross profit as high as 3-4 yuan, even exceeding the gross profit level of the "two colas." Dayao's grassroots agents, during delivery breaks, also helped store owners clean tables and take out trash, establishing close supply relationships. Coupled with high profit levels, Dayao quickly thrived in the dining channel. After years of hard work, Dayao established "revolutionary friendship" with millions of dining channels across the country, but unexpectedly, the carbonated beverage industry changed. NielsenIQ's "2024 China Beverage Industry Trends and Outlook" report shows that in 2023, China's FMCG sales growth slowed by 0.5% year-on-year. Among beverage categories, carbonated drinks were the only one to decline, with sales down 7% year-on-year, and market share falling from 21.2% in 2021 to 18.5% in 2023, returning to 2019 levels. In contrast, sugar-free tea began to accelerate. In supermarkets, large 900ml packs of Eastern Leaf and Genki Forest Ran Tea are everywhere. In 2023, ready-to-drink tea, including sugar-free tea, captured 21.1% of the market share, surpassing carbonated drinks (18.5%) for the first time, ranking first in the industry. Dayao also keenly sensed the iteration and upgrade of beverage categories. In June 2024, Dayao launched three new tea drinks through its WeChat official account: Golden Osmanthus Oolong, White Orchid Oolong, and Oolong Tea, featuring "0 sugar, 0 fat, 0 energy." Additionally, Dayao established the Chayuanxiang brand specifically for these three products. These three sugar-free teas are positioned by Dayao as dining teas. But tea drinks have never been a favored category in the dining channel. Most restaurants provide their own tea; if there is no free tea, most people prefer juice drinks. "Especially in the southern market, ice tea rooms themselves have tea supply, which directly affects tea beverage sales." Chen Jiahua (pseudonym), a regional distributor of Dayao in Guangdong, when introducing supply policies to Interface News · Entrepreneur Frontier, only recommended Dayao's main brand glass bottles and canned carbonated drinks, and said that the sub-brand Chayuanxiang is not available in the dining channel in South China.
More importantly, as beverage penetration grows, the dining channel is also showing signs of fatigue. Luo Yun once said in an interview that Dayao is still focused on the dining channel, and the circulation KA channel is a value supplement after the slowdown of dining channel growth. The starting point is to give distributors in relatively mature markets a second profit growth point. Currently, over 85% of Dayao's sales come from the dining channel. According to data from various local statistics bureaus, in the first half of 2024, the national catering revenue growth rate was 7.9%, while Beijing (-3.5%), Shanghai (-3.6%), Guangzhou (3%), and Shenzhen (1.3%) saw slower catering growth.
Obviously, entering KA channels and community convenience stores is urgent. Interface News · Entrepreneur Frontier visited several supermarkets, convenience stores, and mom-and-pop shops in Sanhe City, Langfang, and found that Dayao products are sparsely distributed, mostly still the main Dayao Jiabin series, and small mom-and-pop stores have no Dayao presence. It is worth noting that Dayao's retail prices vary across different terminal outlets. Currently, in circulation channels, Dayao products are mainly 500ml cans and 520ml large glass bottles, and at different outlets, the price of 500ml cans of Dayao appears at 3.99 yuan, 4 yuan, and 4.5 yuan. In a medium-sized community supermarket, a 500ml can of Dayao is priced at 3.99 yuan, while the larger 520ml glass bottle is only 3.98 yuan, both being fruit-flavored sodas with juice content greater than 2.5%. In addition to sugar-free tea, Dayao has also launched 1L bottles of coconut peanut plant protein drink and hawthorn fruit compound juice drink, forming a product matrix of five categories: carbonated drinks, fruit and vegetable juices, plant protein drinks, energy flavored drinks, and tea drinks. In medium-sized supermarkets, the tea area is occupied by Guozishule and Eastern Leaf, the hawthorn drink area is mainly Shanzha Shuxia, and the plant protein drink area is mainly Lulu and Six Walnuts. Dayao's non-carbonated categories have low penetration in circulation channels.
For comparison, the Haowangshui brand, which also started from the dining channel, has laid out products such as chenpi water, longan water, and barley water in supermarkets. Among the shrimp soldiers and shrimp generals that emerged from the same channel, Dayao seems to have been left behind.
Southern market, an iron plate? If we talk about dominance, Dayao's main battlefield has always been in the north. Dayao is more well-known as a soda brand in the north, and even in the south, its audience is mostly northerners who have left their hometowns. "I drink carbonated drinks with late-night BBQ because it's more refreshing; when eating spicy food, I drink soy milk, lemon tea, sour plum soup, Wanglaoji, etc., to relieve the spiciness. I wouldn't proactively choose Dayao, and it's relatively rare in Guangdong." said a Cantonese person working in Beijing. In South China, stores that sell well also differ. "Northern stores sell relatively better; in southern cities, Sichuan-Hunan restaurants, hotpot shops, wooden barrel rice shops, and snail noodle shops sell relatively better," said distributor Chen Jiahua. "Northern stores can sell 30 boxes a month (one box has 12 glass bottles), while ice tea rooms only sell 10 boxes a month." But the economic prosperity and richness of nightlife in southern cities make it necessary for Dayao to bite this hard bone. In November 2023, Dayao published a plan on its official WeChat account to develop the South China market; in 2024, it clarified its strategy to focus on the South China market and proposed the "North Merchants South Aid" plan. According to public information, Dayao will rely on northern distributors and advance in batches and stages. The first batch of 13 distributors in the "North Merchants South Aid" plan have completed market selection and officially entered the team building stage, with plans to officially execute shelf placement in December 2024. According to the official website, Dayao has completed market layout in 31 provinces, autonomous regions, and municipalities across the country, established a team of over a thousand distributors, and built over a million terminal channels. But since Dayao published the first article about the "North Merchants South Aid" plan on its official account, it has not updated the specific progress of the plan for over a year. In July 2024, with the official completion and operation of the Shandong Dayao intelligent production base, it has now laid out 7 intelligent production bases in Inner Mongolia, Jilin, Liaoning, Ningxia, Anhui, Shandong, Shaanxi, etc., radiating to North China, Northwest, Central China, and East China. Among them, the intelligent factory in Tai'an, Shandong, has an annual production capacity of 800,000 tons. Glass bottles can be recycled and are cheaper than cans, but glass bottle products can only cover a transportation radius of 500 kilometers; too far distances cause losses. Therefore, Dayao builds intelligent production bases domestically, both to ensure quality control and save costs. But the 500-kilometer transportation radius is limited after all, and the terminal market still relies on distributors to conquer city by city. "Currently, the terminal purchase price for Dayao in Guangdong is 38 yuan per box (12 bottles), with a single bottle of 480ml, smaller than the 520ml specification in the north, four flavors, buy 6 boxes get 1 free, one empty bottle exchange for one bottle, unified retail price of 5 yuan per bottle, terminals can increase by 1 yuan, which translates to a purchase price of 2.42 yuan per bottle," Chen Jiahua told Interface News · Entrepreneur Frontier. If calculated at the unified retail price, the gross profit per bottle is less than 3 yuan. Compared to the gross profit of 3-4 yuan per bottle in previous years, it is clearly more difficult for Dayao to enter the slightly disadvantaged southern market with this. Not to mention that Dayao also faces head-on attacks from local soda brands in various regions, such as Bingfeng in Shaanxi, Beibingyang in Beijing, Shanhaiguan in Tianjin, and Tianfu Cola in Chongqing. Dayao also revealed that when the brand entered the market south of the Yangtze River, it lost money for the first three or four years. Luo Yun once confidently believed that the ceiling of many categories cannot be defined solely by sales volume and sales value; maintaining sensitivity to channels and demand, the ceiling for the soda category is far from reached. But for Dayao, circulation channels require sufficient gross profit at all levels, and laying out is slow, while the dining channel faces the problem of low long-term penetration in the southern market. Dayao was once thought to have taken some market share from the "two colas." Now, if it wants to replicate the century-old business model of the "two colas," it may have to pay a greater price.
【New Order · Symbiosis】
****The 10th China FMCG Innovation Conference
Time: March 17-19, 2025 Location: Chengdu, China