With revenue exceeding 10 billion yuan, Dongpeng Beverage has become a formidable player in China's energy drink market, surpassing Red Bull in sales volume for three consecutive years. While still competing with Red Bull, the company's broader strategy of building a pan-energy beverage platform suggests it may be eyeing Nongfu Spring as its true benchmark.
From Imitator to King Dongpeng Beverage (605499.SH) seems never to disappoint. In the first three quarters of 2024, its high-speed growth once again showcased the strength of this Guangdong-based beverage company. From January to September this year, the company's operating revenue and net profit attributable to shareholders reached 12.558 billion yuan and 2.707 billion yuan, respectively, up 45.34% and 63.53% year-on-year. In the third quarter alone, net profit attributable to shareholders was 977 million yuan, up 78.42% year-on-year. The continuous deep cultivation of all channels, coupled with the support of national sales channels, drove the sales growth of major products such as the gold-bottled Dongpeng Special Drink and Bulela. In the first nine months of this year, Dongpeng Special Drink achieved revenue of 10.507 billion yuan, up 31.44% year-on-year.
It's worth noting that more than 20 years ago, the company was just an OEM for Red Bull, earning a meager processing fee. In 1998, the company obtained a health food approval and officially began its journey in the energy drink sector. At that time, Red Bull had already educated the energy drink market nationwide and led the industry. Dongpeng Special Drink was born under the shadow of a giant. The company had to take a different path: while keeping a similar taste to Red Bull, it targeted truck drivers and construction workers with high cost-performance. Even the design of the small bottle cap fully considered the drinking scenarios of the target users.
Through continuous efforts, Dongpeng Special Drink finally carved out a market gap. In 2012, the company's sales in Dongguan, a sample market in Guangdong, exceeded 100 million yuan for the first time, marking a milestone in the company's early stage of repeated product refinement and market exploration. The following year, the company launched its national expansion, signing Hong Kong star Nicholas Tse to build the brand and increasing expansion outside the province. By 2020, it had covered 1.2 million terminal stores nationwide. Today, Dongpeng Special Drink's consumer base is no longer limited to truck drivers and workers; it has become more white-collar and younger, serving as the "life-sustaining water" for knowledge workers in advertising, education, e-sports, and internet industries.
With the deepening of national market development, Dongpeng Special Drink's annual sales volume has grown year by year. In 2023, it exceeded 2.38 million tons, up 28.24% year-on-year. According to Nielsen, last year, Dongpeng Special Drink accounted for 43.02% of China's energy drink market by sales volume, up 6.3 percentage points year-on-year, and has ranked first for three consecutive years.
Blockbuster Harvester Dongpeng Beverage understands both users and the market, which is key to its transition from an energy drink company to a pan-energy beverage platform. Over the past 20 years, the company's business has expanded from energy drinks to electrolyte drinks, sugar-free tea, coffee, and other sub-categories, building a vast matrix in the beverage industry that covers consumers of different ages and penetrates various drinking scenarios such as fatigue relief, sports, and outdoor activities.
As a veteran player in the beverage industry, Dongpeng has keen market insight. When trends like supplementing trace elements, sugar-free, zero-sugar, and zero-additive emerged, the company always captured and actively responded. The "Bulela" launched in 2022 has quickly become a strong player in the electrolyte drink segment. In the first three quarters of this year, Bulela's revenue reached 1.211 billion yuan, up nearly 300% year-on-year, accounting for 9.66% of the company's total revenue. It has become the company's second major product with over 1 billion yuan in sales, following Dongpeng Special Drink.
Dongpeng Beverage places great importance on Bulela and plans to make it the second competitive blockbuster. At the sales terminal, this product performs well. Data from Mashangying shows that Bulela's market share in domestic sports drinks increased from 5.30% in January to 9.40% in July this year. Bulela's rapid growth has led to strong market demand for replenishment. According to public reports, it is estimated that the current total channel inventory is less than two months, a historic low.
The success of Bulela can be seen as one of the achievements of Dongpeng Beverage's "1+6" multi-category strategy. Under this strategy, with Dongpeng Special Drink at the center, the company has laid out six major categories including electrolyte water, coffee drinks, and sugar-free tea, forming a product matrix that paves the way for future sustained growth. Huaxin Securities research report believes that after Bulela forms a modular and standardized approach, the operation of multiple categories such as Dongpeng Daka, Dongpeng Shangcha, and cocktails is expected to be smoother.
A Beverage Empire Worth 100 Billion Dongpeng Beverage's growth has not been smooth sailing. In the late 1990s, company founder Lin Muqin imitated Red Bull to launch Dongpeng Special Drink. Although the formula and taste were similar, the brand was once considered a knockoff due to its low visibility. Red Bull, promoted through sports events, became a household name and led the energy drink market. Many food and beverage companies followed suit, launching various energy drink products. Seeing the hot market, Lin Muqin did not want to give up and decided to take another gamble. He personally conducted in-depth market research, even rummaging through trash bins at highway service areas to count energy drink bottles. In his research, he found that physical laborers such as drivers, couriers, and construction workers were the core demand group for energy drinks. Compared to brand, they cared more about price. So Dongpeng adopted a strategy of large capacity and low price. Catering to blue-collar workers became the key to Dongpeng Beverage's rise.
At the same time, the company left sufficient profit margins for sales channels. According to public data, for a 500ml bottle of Dongpeng Special Drink priced at 5 yuan, the ex-factory price is about 2 yuan, leaving about 3 yuan for the channel. Some also say that Dongpeng Special Drink's rise was facilitated by the "internal strife" of its competitors. Starting in 2016, the prolonged entanglement between Huabin Red Bull and Tiansi Red Bull caused Huabin Red Bull's market share in China's energy drink market to decline. At that time, many energy drink brands saw the opportunity and joined the market battle, creating a smoky battlefield. In the end, Dongpeng Special Drink emerged victorious.
In May 2021, Dongpeng Beverage, under the halo of "the first functional drink stock," listed on the main board of the Shanghai Stock Exchange. Its sustained high growth performance won the favor of investors. At the end of September this year, the company's market value returned to 100 billion yuan. On October 10, the stock price even touched a historical high of 228.79 yuan per share. Yesterday, the company closed at 213.83 yuan per share, with a total market value of 111.2 billion yuan.