On August 22, Yangyuan Beverages released its 2021 H1 annual report. The announcement shows that in H1 2021, Yangyuan achieved operating revenue of 3.411 billion yuan, a year-on-year increase of 91.27%, and net profit attributable to shareholders of the listed company was 1.159 billion yuan, a year-on-year increase of 63.85%, with both revenue and profit growing. Yangyuan stated that the significant revenue increase was mainly due to the low base in the same period last year, affected by the COVID-19 pandemic and the earlier Chinese New Year, while effective pandemic control and the later Chinese New Year this year led to a substantial recovery in market demand. Overall, Yangyuan's performance has basically recovered to pre-pandemic levels, and after this ordeal, Yangyuan seems to have been triggered by some mechanism, changing its previously mild temperament and starting to act rapidly and proactively. The pandemic is a double-edged sword. The COVID-19 outbreak in early 2020 was undoubtedly devastating for products like Yangyuan's Six Walnuts, which rely heavily on offline channels and cyclical attributes. At the same time, whether Yangyuan Six Walnuts could withstand the pressure in the face of such a black swan event as the pandemic, whether it would collapse or find a way to survive, is the true test of a company. More than a year has passed, the impact of the pandemic has weakened, and Yangyuan has also demonstrated its change and rebirth through its actual actions and achievements over the past year. This half-year report elaborates on the internal reforms and restructuring that Yangyuan has undergone since last year and in the first half of this year. It must be said that for a large and relatively traditional organization, the solid foundation and the determination to act decisively in the face of crisis are commendable. Seizing opportunities to strengthen internal capabilities, upgrades and reforms show results 2020 was an extremely challenging year for Yangyuan, and 2021 is a year of comprehensive upgrade. From the actions mentioned in this half-year report, we can find some changes and achievements. 1. Stable foundation, more complete organizational structure In 2020, Yangyuan made a round of adjustments and upgrades to its organizational structure, establishing the Product Strategy Department, Channel Strategy Department, and Brand Strategy Department, with high interconnectivity between departments, greater structural consistency, and more flexible coordination. With market changes brought by the new business environment, it is not easy for traditional organizations to maintain innovation internally, especially for a large enterprise like Yangyuan. How to continuously improve the organization's combat effectiveness and flexibility to respond to a diversified market environment is urgent. Since Yangyuan proposed organizational reform in 2019, the pandemic in 2020 further catalyzed the adjustment and upgrade of the organizational structure. In this half-year report, the key work mentioned for the first half of the year is based on these three core departments. The upgrade of the Product Strategy Department improved the product structure and positioned continuous investment in the plant protein category. The upgrade of the Channel Strategy Department, in addition to strengthening the traditional distribution model, actively laid out emerging channels such as online e-commerce, KOL influencer live streaming, and community group buying, breaking down online and offline marketing barriers and building a comprehensive marketing system. The upgrade of the Brand Strategy Department signed "Hua & Hua" (华与华), deepened cooperation with CCTV, and focused on local satellite TV, continuing to emphasize actions like the "College Entrance Exam Season," further strengthening the brand's positioning. The organizational structure corresponds to Yangyuan's core operations and is fully matched. 2. More daring channel expansion, three-dimensional and diversified channel layout It is worth noting that, in terms of channels alone, the half-year report reveals a lot of information. In H1 2021, Yangyuan sorted out the existing distribution system in various regional markets, strengthening and stabilizing the existing layout of offline traditional circulation and supermarket channels; in addition, it promoted online traditional e-commerce platforms and made efforts in Pinduoduo, Douyin, Kuaishou and other community group buying and live streaming e-commerce channels. Furthermore, cooperating with professional agency operation companies, through refined operations, it achieved optimization and upgrades in traffic, content, design, promotion, membership, customer service and other dimensions, while building a new warehousing system to improve the consumer shopping experience. The new channel system not only helped Yangyuan form an online and offline comprehensive marketing network, but also, on this basis, in addition to the traditional two peak seasons of Mid-Autumn Festival and Spring Festival, the three-dimensional and diversified channels helped marketing derive additional sales nodes such as "Outing Season, May Day, 618, Dragon Boat Festival". The linkage and unity of various channels further promoted the comprehensive layout of consumer activities and the all-round connection with consumers. 3. Trying to leave the comfort zone, increasing R&D and frequent new product launches Another point worth noting is the upgrade of the entire product system. As disclosed in the annual report, Yangyuan changed its previous image, increasing the R&D expense ratio by 50% in the first half of the year, with real investment in new product development. In 2020, Yangyuan successively launched the anti-anxiety new product "Six Walnuts Kamuning," the high-end brain health product "Six Walnuts 2430," and the high-appearance trendy products "Six Walnuts+" series, and further introduced high-end equipment to improve production processes, using innovative processes such as "Whole Walnut CET Cold Extraction Technology" and "Five-fold Refining Grinding Technology" to achieve dual upgrades in taste and nutrition. In H1 2021, in addition to continued investment in the high-end product "Six Walnuts 2430," Yangyuan achieved a "high, medium, and low" product portfolio. For example, in lower-tier markets that are more active in emerging channels, Yangyuan launched multiple Tetra Pak packaged products targeting the characteristics of these populations. In addition, for regular products, Six Walnuts also continued to launch multi-flavor products such as black tea+, coffee+, and fermented, and tried multiple packaging forms such as Tetra Pak and cups, adapting to different needs in multiple scenarios. Another key point: this half-year report mentioned that the brand has made a breakthrough in the plant-based milk production line that has been laid out for a long time, and it is expected to be officially put into production in the second half of the year. Presumably, more new products will follow at that time. Final Thoughts: The pandemic in 2020 brought a huge impact to the industry, and all enterprises faced enormous challenges. For Yangyuan, this was even more so, but when the challenge came, Yangyuan seemed to finally run towards a new direction with unwavering determination and effort. As consumers' health needs become more refined and personalized, Yangyuan, as the industry leader in plant protein beverages, sees the huge potential opportunities in the market. The comprehensive upgrades of the new organization, channels, and products are all laying the groundwork for the development of the plant protein beverage category, which has broad prospects. No wonder Yangyuan has changed its vision from "leading the development of the walnut product industry" to the current: "To become China's most trusted plant-based milk beverage enterprise, leading the plant-based milk industry to grow into a 100-billion-level major category." Are you "watching" me?