New Distribution exclusively learned that on September 1 (today), Yangyuan Beverages held a mobilization meeting at its headquarters to officially begin operations of Red Bull Anaji under Thailand's TCP Group.
Who is Red Bull Anaji? It is the first new Red Bull product launched by TCP Group in China after the licensing dispute with Reignwood's Red Bull. Who is Yangyuan Beverages? Mention 'Six Walnuts' and you'll know. Hebei Yangyuan ZhiHui Beverages Co., Ltd. (referred to as Yangyuan Beverages) is the parent company of the Six Walnuts product. One is a globally renowned functional beverage brand, the other is a sales legend that went public on the strength of a walnut milk beverage. What does their cooperation mean?
-01- Anaji's Poor Sales Performance, Tiansi Seeks New Breakthrough
In June last year, Red Bull Anaji was officially launched, and at that time it was quite prominent. Over a year later, the product has generally hit a bottleneck, and its current situation is not ideal. It is understood that there have been issues such as inverted terminal prices and cross-regional selling in the market. Many industry insiders have indicated that Anaji has encountered a 'localization problem' in the Chinese market.
Perhaps seeing that the plan to use Anaji to counterattack Reignwood's Red Bull was hindered, TCP Group hurriedly launched Plan B: a second new Red Bull product, Red Bull Vitamin Flavored Beverage. This product avoided Anaji's shortcomings, with adjustments in both taste and name. Based on current feedback from distributors, this product has significantly better terminal sell-through and a stronger momentum than Anaji initially had.
However, TCP Group is clearly not satisfied with this. For them, the pace is still too slow. There are multiple factors behind Anaji's poor sales, but the brand itself is not the issue. Therefore, TCP Group initiated Plan C: partnering with local Chinese enterprises to leverage their strength to expand product distribution and quickly capture market share. In doing so, TCP Group has split its two 'biological sons'—Anaji and the Flavored Beverage—into separate operations. The Flavored Beverage remains under Pusheng, while Anaji has been given a 'stepfather.'
It is understood that starting in May this year, TCP Group began negotiations with various parties and ultimately selected Yangyuan Beverages.
-02- Speculations on the Logic Behind the Cooperation
Speculation 1: Why Yangyuan Beverages? According to insiders who revealed to New Distribution, Yangyuan did not secure the national operation rights, but rather the operation rights for Red Bull Anaji in the region north of the Yangtze River. Yangyuan's home base is in the north, where it has a deep and very stable market foundation. It is understood that in the north, Yangyuan can easily get distributors to include Anaji in their sales, whether through bundled promotions or other means. On one hand, this is due to Yangyuan's clear channel advantages in the northern market. Additionally, New Distribution has learned that the southern market is relatively advantageous for Anaji, where it sells better and is currently handled by several larger agents. In contrast, the northern market is different; without aggressive efforts, Anaji's chances are slim and it's hard to break in. This is likely the main reason TCP Group chose to cooperate with Yangyuan.
Speculation 2: What Does Yangyuan Value? Brand? Product? Not long ago, Yangyuan Beverages released its first-half performance report, and as expected, it showed a significant decline. It's obvious to everyone that this is due to the pandemic. Six Walnuts, as Yangyuan's major product contributing over 90% of its revenue, suffered a severe setback this year due to the pandemic. Six Walnuts has gift-giving attributes, and the Spring Festival is the most important sales season each year. When the pandemic broke out this year, especially with its prolonged duration, everyone from top management to terminal store owners had to worry about mountains of Six Walnuts gift boxes. Moreover, as a listed company, Yangyuan Beverages has been questioned for the risk of relying on a single product. The management not only has to answer to employees and partners but also to shareholders, facing immense pressure.
So, a bold guess: From the management's perspective, the influence of the Red Bull brand might boost Yangyuan's morale. Additionally, there may be many areas for cooperation at the product level. For example, both companies' products rely heavily on can packaging—could they share packaging lines? Also, both products are health foods—is there an opportunity to adjust Anaji's flavor? And so on. With Six Walnuts' performance faltering, it's clear that Yangyuan needs to find a product for the next growth cycle. Red Bull Anaji fits the bill perfectly, and the profits it could bring should be substantial.
-03- Escalating Chaos: Three-Way Battle! Predictions for Future Developments
Previously, the market only had two parties fighting: Pusheng Company, the fully authorized operator under TCP Group, and Reignwood Group. Industry insiders are also aware that Pusheng and Reignwood once had internal connections. So when Anaji entered the market, those familiar with the situation knew that many of Reignwood's Red Bull distributors played dual roles, selling both Reignwood Red Bull and Tiansi Red Bull. Moreover, many members of the newly formed Anaji team came from Reignwood. Therefore, in the early stages, the market appeared calm, with Pusheng and Reignwood trying to maintain harmony, engaging in quiet competition without going too far. In China, it's a society of acquaintances where personal relationships matter. Today, Anaji employees might still greet Reignwood employees or distributors, as they were once brothers and comrades, and many things are overlooked to avoid tearing apart. After all, the market will eventually be taken over by one side or the other, so for now, it's 'you're fine, I'm fine, everyone's fine.'
Now, with a third party entering, the situation changes. The cooperation between Tiansi and Yangyuan clearly breaks the mold. Previously, everyone was in the same circle, with many mutual acquaintances and each having their own bottom lines. Reignwood Red Bull, for instance, has always maintained good price control. Now, the competitive relationship has escalated. It must be said that TCP Group has some tactics and ideas, directly creating a competitor for Pusheng, even making their own products compete against each other—a ruthless move. So, a price war may be inevitable. Yangyuan's large sales team and distributor network are about to enter the battlefield in three minutes. The existing Red Bull team should hold steady.
What's even more frightening is that besides Yangyuan, there might be more participants like Li Si or Zhao Wu in the future. There were earlier rumors that Red Bull would cooperate with Uni-President. At the time, we dismissed it as absurd, but now it suddenly occurs to us that TCP Group might have actually been in talks with Uni-President. Although TCP Group may not want to see price chaos, once the conflict escalates to the entire beverage industry, a bloody storm is coming...
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