---
title: "Revenue Down 75.14%! Why Is Baorun Not So 'Moist' Anymore?"
description: "On August 1, Baorun Co., Ltd. released its 2016 semi-annual report. The report shows that Baorun's revenue in the first half of the year was 420 million yuan, down 75.14% from 1.688 billion yuan in the same period last year; net profit fell from 613 million yuan to -145 million yuan, a year-on-year decrease of 123.64%. The company attributed the sharp decline to a significant drop in its pre-mixed cocktail business in the first half of 2016, which was dragged down by its once-popular RIO cocktail brand."
author: "方璐"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-08-07"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/oRKTQmOnLrCMH-BaS9cmCA"
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# Revenue Down 75.14%! Why Is Baorun Not So 'Moist' Anymore?

> On August 1, Baorun Co., Ltd. released its 2016 semi-annual report. The report shows that Baorun's revenue in the first half of the year was 420 million yuan, down 75.14% from 1.688 billion yuan in the same period last year; net profit fell from 613 million yuan to -145 million yuan, a year-on-year decrease of 123.64%. The company attributed the sharp decline to a significant drop in its pre-mixed cocktail business in the first half of 2016, which was dragged down by its once-popular RIO cocktail brand.

On August 1, Baorun Co., Ltd. released its 2016 semi-annual report. The report shows that Baorun's revenue in the first half of the year was 420 million yuan, down 75.14% from 1.688 billion yuan in the same period last year; net profit fell from 613 million yuan to -145 million yuan, a year-on-year decrease of 123.64%.
As for why the performance collapsed, Baorun stated that it was mainly related to the significant decline in its pre-mixed cocktail business in the first half of 2016. Indeed, it was the once-popular RIO cocktail that dragged down the company's performance.
The financial report shows that **in the first half of 2016, Baorun's pre-mixed cocktail sales were 348 million yuan, a year-on-year decline of 78%.**
So, what made the once-popular RIO stop selling? Why has Baorun become less 'moist' in just a few years?
**Relatively Single Consumer Base**
Market expansion has certain limitations. Pre-mixed cocktails have a relatively ambiguous taste. Some professionals say, "Pre-mixed cocktails are not fermented, so strictly speaking, they are not alcohol." If considered alcohol, their alcohol content is only about 3%-7%, lower than that of regular beer. If considered a beverage, they contain alcohol. As RIO's slogans like "Don't drive after drinking" and "Minors should not drink" suggest, at least minors and drivers would not choose cocktail drinks when selecting beverages.
In terms of packaging, RIO mainly comes in bottles and cans. Regardless of the packaging, RIO projects an image of fashion, individuality, youth, and vitality, with colorful designs that match the flavors, effectively capturing the attention of young people. However, this focus has overlooked consumers in other age groups.
In advertising and marketing, Baorun has invested heavily in RIO. Whether it's the popular TV dramas "Silent Separation" and "Boss & Me," or the hit variety shows "Running Man" and "Day Day Up," as well as the new season of "Sing! China," RIO frequently appears in the public eye. These TV dramas and variety shows primarily target young audiences.
Additionally, whether it was Zhou Xun in the past or now Guo Caiye and Yang Yang, RIO's endorsers are all idols in the eyes of young men and women. Therefore, RIO's consumer base is relatively single, mainly young people.
**Low Entry Barrier in the Cocktail Market**
It is difficult to cultivate loyal consumers. Although RIO has launched multiple product lines such as Benwei 5°, Qiangshuang 8°, and Xinweixun, in terms of taste, it ultimately cannot escape the impression of being a mix of juice and alcohol.
Many industry insiders say that RIO's initial rapid success was due to Baorun seizing market demand and gaps, as well as good marketing. However, short-term prosperity cannot hide long-term weaknesses. The cocktail market has a low entry barrier; mixing brandy, rum, vodka, whiskey, or wine with juice has low technical content but high requirements for personalization, making it difficult to cultivate loyal consumers.
There are even online guides teaching people how to mix various cocktails with alcohol and juice. For example: Russian vodka + orange juice = RIO (Ruiao series) orange flavor, rum + peach juice = Qingdao Mary peach flavor, Bacardi rum + raspberry juice = Bacardi (Bingrui series) blueberry flavor, etc.
**Intense Market Competition**
The "first-mover advantage" is hard to maintain in the market. Besides RIO, there are Breeze, Lordee, VK (originally from the UK), Gallanter, Bacardi, Ruiwu, High Blue, Power Station, and many more. A rough count shows over a dozen brands. In addition, RIO's popularity has attracted many new entrants.
It is understood that in early 2015, industry giants such as Huiyuan, Wuliangye, and Gujing Gong all announced plans to enter the pre-mixed cocktail market, and even companies outside the industry like Black Cow Food also wanted a piece of the pie. The explosive emergence of numerous cocktail brands has eroded RIO's first-mover advantage, and the shallow brand advantage it had built is no longer sufficient to attract consumers.
Despite the unfavorable operating conditions, Baorun has not lost confidence. Currently, Baorun has already introduced some strategies. In terms of new products, the Benwei 5°, Qiangshuang 8°, and Xinweixun series have all been distributed to varying degrees. In marketing, it has confirmed sponsorship of several hot projects, including the Rio Olympics.
In addition, the company just received approval from the China Securities Regulatory Commission on August 2 for a 1.3 billion yuan private placement plan, of which 875 million yuan will be invested in expanding RIO cocktail production capacity.
This article was compiled and edited by Food Economy, written by Fang Lu. For more food industry news,
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