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Jianlibao and Beibingyang, one known as the 'Oriental Magic Water' and the other as 'Beijing's No.1 Soda,' are deeply etched in the childhood memories of those born in the 70s and 80s, but both fell from their pinnacle.

Thirty years on, Beibingyang, which made its comeback in 2011, has seized the moment and is thriving again. In 2018, it began a nationwide expansion, building production bases outside Beijing. With the Ma'anshan base operational in June 2018, its sales reach expanded, and sales grew nearly 30% year-on-year in 2018.

In contrast, Jianlibao only returned to the Jianlibao Group in 2016. Despite vigorous promotions of new products, a return to first-tier cities, and the slogan 'Old Friend, New Strength' in the following two years, it had little substantive impact. Now, with a new slogan, 'This is China's Jianlibao,' it seems to be leveraging the 'national trend' to re-enter the mainstream.

But with China's beverage market now diverse, and without advantages in channels or products, can Jianlibao rise from the ashes like Beibingyang?

The Fall of a 'Hero'

Both Beibingyang and Jianlibao were 'heroes' of the 1990s, but both were sold at their peak, albeit for different reasons, leading to their subsequent decline.

Founded by Li Jingwei in 1984, Jianlibao was a novel beverage rich in alkaline electrolytes, designed to quickly replenish minerals after sweating. Li linked the drink to sports, using his connections in the sports commission to supply it to Chinese Olympic team athletes for consumption during competitions or rest.

At the 1984 Olympics, the Chinese women's volleyball team defeated the host US team, achieving a 'three-peat' in world competitions. Japanese media attributed this success to a drink called 'Oriental Magic Water'—Jianlibao. From then on, Jianlibao became a household name and a regular at sports events.

Statistics from the China Beverage Industry Association since 1991 show that Jianlibao dominated the national soft drink industry from 1991 to 1996, ranking first in output, sales, taxes, and profits.

In 1997, Jianlibao's sales exceeded 5 billion yuan, reaching its historical peak. That same year, Li Jingwei initiated an IPO plan to move the headquarters from Sanshui to Guangzhou, but this was blocked by the actual controller, the Sanshui municipal government. The IPO was shelved, and Jianlibao's fate was sealed.

In 2002, the Sanshui government sold Jianlibao to Zhejiang Guotou, beginning a turbulent period of ownership changes.

Like Jianlibao, Beibingyang's sale was also forced. A Beibingyang leader once revealed, 'The joint venture was mandated by higher authorities. Beibingyang had held on for years, but finally couldn't anymore.'

In 1994, Beibingyang formed a joint venture with PepsiCo, after which it languished, its R&D team disbanded, production lines disappeared, and the brand vanished from the market. Later, media reports suggested this was a common strategy by foreign companies to eliminate local brands.

Brand Revival

With growing interest in 'national trends,' 'national brands' have become a hot topic, and nostalgia has become a marketing point for many companies.

The earliest comeback was Beibingyang. As early as 2007, Yiqing Food Group, which managed Beibingyang, negotiated with PepsiCo to reclaim the brand. On the condition of 'not producing any carbonated beverages under the Beibingyang brand for four years,' Yiqing regained the brand's operating rights.

Subsequently, Yiqing assembled a professional technical team, reviewed historical materials, consulted veteran Beibingyang employees, and through technical discussions, replicated the Beibingyang orange soda, bringing the brand back.

After relaunching, Beibingyang positioned itself as the 'national soda,' with the slogan 'You're just drinking soda; I'm drinking Beibingyang.' Starting with glass-bottle soda, it developed orange juice and sugar-free tangerine and orange sodas, and introduced products for foodservice and retail. In 2017, 'Dailin' returned, and in 2018, plastic-bottle sodas were launched.

Jianlibao's return has been less smooth. After its first sale, it led a wandering existence.

After being sold to Zhejiang Guotou, Zhang Hai became the actual controller. He looked down on the 'outdated' brand and implemented a series of reforms. In products, he launched 'Fifth Season' and 'Burst Fruit Soda' with new positioning; strategically, he abandoned town markets for first-tier cities; in marketing, he dismissed 80% of the old marketing staff and adopted Coca-Cola's fine-tuned channel and market management.

As a result, the marketing team expanded from 500 to 6,000 people, rapidly increasing marketing costs; advertising spending also soared, but results were far from the 'Oriental Magic Water' era.

In 2005, Jianlibao was sold to Uni-President, but its decline continued. According to business registration data, from 2013 to 2015, Jianlibao Trade's total revenue was approximately 1.933 billion yuan, 1.785 billion yuan, and 1.682 billion yuan, respectively—a cliff-like drop from the peak of 5 billion yuan.

The former soft drink giant had become a burden, a lamentable fall.

Eventually, Uni-President sold Jianlibao. In 2016, Uni-President Group signed an equity transfer contract with Guangdong Jianlibao Group, agreeing to sell its 100% stake in 'Foshan Sanshui Jianlibao Trade' for 950 million yuan, officially returning Jianlibao to its original group.

Is Jianlibao the Next Beibingyang?

In the business world, nothing is constant, especially in China's beverage industry.

Among the returning brands, Beibingyang is relatively successful, with sales up nearly 30% year-on-year in 2018.

So what did Beibingyang do right?

First, Beibingyang has 'real ingredients.' Although it's a fruit-flavored carbonated drink like Fanta, it uses real juice rather than flavorings, making it distinct. Second, those who grew up in Beijing have a nostalgic attachment to Beibingyang; last year, it released a one-minute video ad focused on nostalgia.

Beyond nostalgia, Beibingyang has actively adjusted in other areas:

  • At the end of last year, to attract younger consumers, it switched from thick cans to slim cans;
  • In terms of categories, it offers tangerine, orange, and sour plum flavors;
  • In channels, it deepened cooperation with Suning Xiaodian, integrating Suning's smart retail into production, packaging, marketing, and distribution.

Data shows that as of May 2019, Beibingyang products were available in 1,668 Suning Xiaodian stores across 16 provinces, municipalities, and autonomous regions. In the first five months of 2019, offline sales exceeded 92.8% of the full-year 2018 sales, and online sales grew 130% month-on-month on average.

Jianlibao's return seems ill-timed. Starting in 2017, it moved to a new site, promoted new products, returned to first-tier cities, and adopted the slogan 'Old Friend, New Strength,' but with no substantive effect. In 2018, it even launched biscuits bundled with classic drinks, but that fizzled out.

We noticed that Jianlibao's official website lists seven beverage products; the retail categories it once tried have disappeared.

As early as 2018, there were rumors of a Jianlibao IPO. Thus, the new slogan 'This is China's Jianlibao' is seen by industry insiders as an exploratory step to re-enter the mainstream and prepare for listing.

Euromonitor International's 2018 industry data shows that the functional drink market totaled 59 billion yuan in 2017, with projections of 61.9 billion, 65 billion, and 68.5 billion yuan for 2018-2020. Sports drinks are Jianlibao's strength, and this industry growth gives it confidence to try again.

However, over the past decade, domestic brands like Red Bull, Dongpeng Teana, and Lehu have captured nearly 80% of the functional drink market, a high concentration. Breaking through will not be easy for Jianlibao.

For consumers, Jianlibao, like Beibingyang, has strong brand value. They find Jianlibao's taste unique and are optimistic about its future. But whether Jianlibao can rise again depends on how the team executes.

Currently, Jianlibao needs to reposition its consumer base rather than rely solely on nostalgia. Moreover, no matter how good the product, channels are essential. For consumers, sports drinks are often bought in supermarkets or convenience stores, so distribution must be robust.

For Jianlibao, will it be a king's return or a flash in the pan? As a once-'extinct' brand in the increasingly competitive functional drink market, Jianlibao still has a long way to go to regain its former glory.

Source: Zhiliao Finance