Click to read the original article for details. "Plant-based beverages are a trend in the beverage sector, but operations are crucial. Based on feedback from the channel, dealers are not very interested in Yinlu's Ten趣 Caotang series, and their impression is not deep enough." Yinlu, known for its eight-treasure porridge, recently launched its first plant-based beverage, strengthening its beverage portfolio while Nestlé continues to patch up Yinlu's performance. This is also Nestlé's first bold attempt at transforming Yinlu since the full acquisition in June 2018. In the eyes of industry insiders, plant-based beverages are a trend in the beverage sector. With JDB's decline and Wanglaoji's dominance, there are opportunities for various brands to capture market share. For Nestlé, this may also provide a window to reverse Yinlu's performance. Diversified Layout According to a Nestlé spokesperson, entering the plant-based beverage market has significant strategic importance for Yinlu's category diversification, and Nestlé is optimistic about the market prospects. Yinlu has launched its first plant-based beverage, "Ten趣 Caotang," which includes three products: Chrysanthemum Plant Drink, Luo Han Guo Drink, and Bamboo Cane & Imperata Root. These three drinks correspond to the lifestyle of the "post-90s" generation, offering tailored solutions. The products are currently available in South China regions such as Guangdong, Guangxi, Fujian, and Zhejiang, focusing on transportation hubs, schools, and traditional grocery stores. The retail price is 6 yuan per bottle in convenience stores and 5 yuan in traditional channels, with plans to launch in more regions nationwide in June. According to data, Yinlu was founded in 1985 and primarily engages in canned food and beverage production. Eight-treasure porridge and peanut milk are two star products under Yinlu. Before the Nestlé acquisition, Yinlu could produce 600,000 tons of various food, beverages, and canned goods annually, making it the largest canned food and beverage production base in Fujian Province, with annual sales of about 5.4 billion yuan. In April 2011, Nestlé announced it had acquired 60% of Yinlu's equity and signed a joint venture agreement. Subsequently, in 2017 and 2018, Nestlé acquired the remaining shares from its joint venture partners, fully owning Yinlu and beginning its transformation. In 2018, Nestlé repositioned Yinlu's business, introducing ready-to-drink coffee for OEM production, thereby boosting Yinlu's performance. Complementing Nestlé's Product Line Regarding Yinlu's diversification, a Nestlé spokesperson said that China is Nestlé's second-largest market globally, and Nestlé attaches great importance to the development of its local brands, using different brands to meet consumers' personalized needs. These products help complement Nestlé's beverage product line. Plant-based beverages are made from plants or plant extracts (excluding tea and coffee) as raw materials (non-fruit/vegetable plant roots, stems, leaves, flowers, seeds, or sap secreted by bamboo or trees, processed or fermented). With increasing health awareness, the healthier plant-based beverage market is expected to reach a scale of 100 billion yuan. Currently, Nestlé's beverage business in China includes water, ready-to-drink coffee, and functional drinks, with gaps in plant-based beverages and other areas. In fact, although Yinlu has a relatively high market share in the peanut milk segment, it only holds a 6.2% share of the overall plant protein beverage market. Compared with competitors, Yinlu's actions appear somewhat "lagging." The overall peanut milk market capacity is relatively fixed. In the past, Yinlu was "dominant," but as Yili, Mengniu, Sanyuan, Chenguang, and Daliyuan launched peanut milk products, Yinlu's market share has been eroded and diluted. The peanut milk category, due to many companies following suit, has moved from a growth phase to a mature phase, with limited market growth. "In the current competitive beverage environment, companies need to continuously innovate and launch 'small but beautiful' products. Only through continuous product iteration can they maintain appeal to the new generation of consumers," said Zhu Danpeng, an analyst at China Food Industry. "With Nestlé's strong R&D advantages, Yinlu's current diversification strategy is conducive to helping the brand escape its predicament, enriching its product offerings and opening new revenue streams, while also enriching Nestlé's product line in China." Patching Up Yinlu's Performance In the view of Xu Xiongjun, a strategic positioning expert and founder of Shanghai Jiude Positioning Consulting, launching plant-based beverages is an important measure to continuously repair Yinlu's performance. In 2017, newly appointed Nestlé CEO Mark Schneider stated that Nestlé was working to repair its U.S. Gerber baby nutrition business and China's Yinlu business. Data shows that from 2013 to 2015, Yinlu's overall revenue gradually declined, from 11.1 billion yuan in 2013 to 9.647 billion yuan in 2015. In 2016, it experienced double-digit decline. Yinlu's peanut milk currently has a low market share in the segment, only 6.2%. In the single category of instant porridge, Yinlu launched Zhenyang Porridge in January 2019, while the last new eight-treasure porridge product was launched in 2016. In 2018, after introducing Nestlé's ready-to-drink coffee business, as an important business segment for Nestlé in Asia, Oceania, and Sub-Saharan Africa, the stability of Yinlu's business turned Nestlé's performance growth in China positive. According to data, Yinlu currently has five production bases in Xiamen, Shandong, Hubei, Anhui, and Sichuan, and has established 165 sales service offices nationwide, with over 1,300 first-tier distribution partners and over 6,000 second-tier distribution partners, controlling more than 1.2 million sales terminals. In addition to eight-treasure porridge and peanut milk, Yinlu mainly produces the Silky series, Xueka Musi, and the newly launched cold-brew coffee series. However, an industry insider said, "Plant-based beverages are a trend in the beverage sector, but operations are crucial. Based on feedback from the channel, dealers are not very interested in Yinlu's Ten趣 Caotang series, and their impression is not deep enough." The person added, "Yinlu's products are too single, only peanut milk and eight-treasure porridge, and the brand's presence is not strong, so dealers do not recognize it much." Source: Beijing Business Today