“The market has changed, and beverage companies must adapt accordingly. ” Recently, during the mid-year report disclosure period, news about two FMCG giants was shocking: Huiyuan, the former juice giant, has delayed its mid-year report, is reported to be in debt of over 10 billion yuan, and faces the risk of delisting at any time; Xiangpiaopiao, which claims to sell 1.2 billion cups a year, suffered a net loss of over 50 million yuan. What exactly is happening to these beverage industry leaders that were once national brands? In fact, the entire beverage market has undergone earth-shaking changes in recent years. On one hand, the once-glorious giants are gradually losing market share; on the other hand, new brands and categories are emerging one after another. How to break through and capture consumers' hearts has become a challenge for many brands. Two Beverage Giants Suffer Losses Recently, Huiyuan Juice has been having a hard time. A series of negative news has pushed it to the forefront: suspension of trading in Hong Kong, market value evaporation of nearly HK$12 billion, debt of 11.4 billion yuan, and the risk of delisting at any time... It looks fraught with crisis. In fact, judging from Huiyuan Juice's financial reports in recent years, the company's performance has been declining all along. Its stock price peaked in the year of listing and then kept falling, and its asset-liability ratio remained high. Since 2011, Huiyuan Juice's net profit attributable to shareholders (excluding non-recurring gains and losses) has been negative for six consecutive years. This national brand, once called the "King of Juice," seems to be on the brink of life and death. Similarly, Xiangpiaopiao, which claims to "sell 1.2 billion cups a year," recently released its first report card after listing. Data shows that in the first half of this year, its revenue was about 870 million yuan, a year-on-year increase of 55.38%, but net profit fell 79% year-on-year, with losses expanding to 54.586 million yuan. The former glory of these two beverage industry giants is still fresh in memory. One is China's No.1 juice brand, having been on the "China's 500 Most Valuable Brands" list for 13 consecutive years; the other is the first milk tea stock, claiming that the cups sold each year could circle the Earth four times. Both were benchmarks in the industry. However, now they are almost simultaneously trapped in huge losses. In fact, it's not just them; in the past two years, the beverage market share of traditional leaders like Wahaha, Master Kong, and Coca-Cola has also declined, but their decline is particularly obvious. It makes one wonder: what exactly is wrong with these once-glorious industry giants? Product Aging and Outdated Marketing Are the Maladies "The products are too outdated and no longer match the consumption habits and purchasing channels of current consumers," said an industry insider. Apart from operational layout mistakes and capacity expansion issues, the biggest problem for Huiyuan and Xiangpiaopiao is product aging. 100% juice is the core business that Huiyuan relied on to start, and it is also its most competitive advantage, holding a leading position for a long time; but that's all. Apart from juice, Huiyuan has no other notable products. Although it has launched some new products including soda water and carbonated beverages, they have made little noise due to late market entry. Moreover, the core product, juice, no longer fits the tastes and consumption habits of young people. "If young people want to drink juice, they prefer freshly squeezed juice or chilled juice with more fashionable packaging and concepts. Some imported juices are sold at 9.9 yuan during promotions; there are too many choices," a beverage wholesaler told reporters. Huiyuan's best-selling 1-liter 100% juice and 2.5L pulp series are not available in the currently popular convenience store channels, and the main channels for the 2.5-liter pulp series are urban-rural fringes, townships, and third- and fourth-tier cities. Xiangpiaopiao faces the same problem. It focuses on cup milk tea, but with consumption upgrading, various milk tea shops and internet-famous stores are emerging, with products and marketing methods that better match consumers' preferences. Fewer and fewer people go to supermarkets to buy cup milk tea and brew it with hot water at home. Despite the aging products, these traditional beverage giants' marketing expenses remain high. According to statistics, from 2014 to 2017, Xiangpiaopiao's advertising expenses totaled 1.176 billion yuan. In these four years, its net profit totaled 923 million yuan, meaning its advertising expenditure far exceeded its net profit. Similarly, Huiyuan Juice also spent heavily on CCTV advertising, but these advertising resources were more focused on official media such as CCTV Spring Festival Gala and CCTV channels. There were no particularly obvious moves in online variety shows or marketing, giving the impression of relying on past achievements and failing to attract young consumers. "This kind of crazy advertising investment can boost sales and improve company performance in the short term, but it is an extensive growth model with high risks. It requires high capital and puts excessive cost pressure on the company. Once advertising and marketing effects are poor, it may have a significant impact on the company," said an industry insider. New Brands Act Cute, Old Brands Sell Nostalgia In stark contrast to the plight of these beverage giants, the current beverage market is increasingly diversified, and consumers have a wider range of choices. "When I buy beverages now, I first look at taste and then packaging. If there are new categories, I'm also willing to try them," said Ms. Chen, a citizen buying drinks at a supermarket in Yuejiazui, as she put several bottles of Japanese marble soda into her shopping cart to try something new. Reporters visited several supermarkets and found that many beverages have launched packaging with a fresh, cute style to attract consumers with appearance. Many bottles also use illustration styles and are adorned with various "golden quotes," using trendy phrases to appeal to young consumers. On the other hand, many old sodas that once disappeared have reappeared with a new look. At Zhongbai Luosen convenience stores and large supermarkets like Wushang and Zhongbai, cold drink counters now display the new "Erchang Soda," with the slogan "The taste of all Wuhan," sold alongside imported drinks like Japanese marble soda and French Evian mineral water. Besides Wuhan's "Erchang Soda," Beijing's "Arctic Ocean," Chongqing's "Tianfu Cola," Qingdao's "Laoshan," and Shaanxi's "Bingfeng" have also returned to the market, using the banner of "nostalgia" and "sentiment," embracing cultural elements, adding cultural connotations to soda, and becoming city IPs. "These old brands meet consumers' needs on three levels: functional, emotional, and social. At the same time, they actively embrace new retail, lay out catering channels, develop e-commerce, and play with new marketing methods, thus quickly re-establishing themselves in the market," said an industry insider. Companies like Huiyuan and Xiangpiaopiao, which are not good at proactively seeking innovation and change, will find it increasingly difficult to survive. Differentiated Transformation Has Become an Inevitable Choice "The market has changed, and beverage companies must adapt accordingly," said Zong Qinghou, chairman of Wahaha, at a public event not long ago. He stated that China's beverage industry has entered a "new normal" stage of slowing growth, which requires more differentiated competition. Innovation and transformation and upgrading have become urgent needs and inevitable choices for the beverage industry. "Tastes should be healthier, and marketing should be younger," pointed out an industry insider, indicating two inevitable directions for the future development of the beverage industry. Nowadays, the health concept is gradually gaining popularity, and the structure of the beverage market has undergone significant changes. Many traditional beverages that were once highly respected are cooling down, while healthy beverages are heating up. Original ecology, mixing, and light tastes have become major trends. In fact, well-known beverage companies at home and abroad, including Coca-Cola, PepsiCo, Master Kong, Uni-President, and Wahaha, have all stated that the era of big single products in the beverage industry is gone, and future beverage products will focus on "health" and "diversity." In terms of marketing methods, using the Internet and IP, capturing young consumers means capturing potential users in the beverage industry. "The beverage industry has passed the era of producing and selling immediately; it is now an era of showing presence. Whoever appears in more terminals, whoever can build the Internet and fan chain, will have the opportunity to become the next big single product," said an industry insider. Source: Chutian Metropolis Daily -END-