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Wu Huiman, PhD in Management from China Agricultural University, microeconomic analyst at Genius纵横 International Enterprise Management (Beijing) Co., Ltd. Specializes in corporate strategy and HR management system analysis, currently focusing on agricultural product deep processing and consumer goods industry analysis, case studies, and corporate strategy and marketing research. Life motto: Pursue excellence, and success will follow you. On September 18, 2015, new developments emerged in the once-sensational insider trading case involving Huiyuan Juice, inadvertently bringing the long-silent company back into the spotlight and evoking memories of its "fateful romance" with Coca-Cola. Six years later, a weathered Huiyuan Juice appears somewhat fatigued. Despite repeated rumors that Mr. Zhu intends to sell the juice business, no substantive action has been taken. Setting aside rumors, let's objectively assess: Should Huiyuan Juice still be sold today? Struggling Between Upstream and Downstream In 2008, Coca-Cola's $2.4 billion acquisition of Huiyuan Juice at nearly a 2x premium made it a legend overnight. However, the Ministry of Commerce's rejection reversed that narrative, altering Huiyuan's fate. From 2009 to 2014, while revenue increased annually, profits declined steadily. Excluding government subsidies and income from asset sales, Huiyuan actually posted losses in 2012 (RMB 305 million) and continued to lose money in recent years (RMB 341 million in 2014), as shown in Table 1. Moreover, beyond issues like plasticizer scares and the "rotten fruit" controversy, the company's core juice business struggled: new low-concentration juice products like "Lemon Me," "Juice Joy," and "Candied Hawthorn" received lukewarm responses; related ventures such as "Xurisheng" iced tea, "Love Little Time" plant-based protein drinks, "Feineng" energy drinks, and even fruit-flavored cocktails faced setbacks; and diversification into fruit farming, agriculture, and other "non-core" activities drew criticism for being "too restless," even being mocked as "speculative moves." Indeed, Huiyuan's poor performance is partly due to its lack of focus, but fundamentally it stems from the tug-of-war between upstream and downstream operations. Huiyuan started with orchard bases, making upstream fruit farming and even large-scale agriculture its strength—and Mr. Zhu's long-held dream. In 2008, while the Coca-Cola acquisition was pending, Huiyuan accelerated upstream expansion, building fruit production and processing bases in Hubei, Anhui, Shandong, and other regions, investing RMB 2 billion in just two months. For upstream investment, RMB 2 billion was not a huge sum and only a small step in a long march. Indeed, over the following years, as Huiyuan's agricultural dream grew, spending quickly escalated from billions to tens of billions of RMB. Of course, if the juice business had been sold successfully, the $2.4 billion proceeds could have covered these costs. Unexpectedly, the failed sale meant both upstream and downstream investments had to continue. From 2009 to 2013, the juice and juice drink industry was in a golden growth phase, with a compound annual growth rate of 20%. Within that, low-concentration juice drinks (25% or less) captured 85% of market value, while medium-concentration (25%-99%) and 100% juice shared the remaining 15%. A continuing Huiyuan Juice could not afford to stay in the medium-to-high concentration segment, which was only a small portion; entering the low-concentration market became inevitable. However, competing against beverage giants like Master Kong, Uni-President, and Coca-Cola, as well as numerous local brands, was tough. Besides high-quality branded products, extensive distribution networks, and skilled marketing teams, sustained scale investment was essential. As Table 2 shows, after 2008, Huiyuan significantly increased sales spending. Upstream investments weighed on finances, while downstream spending eroded sales profits. It is in this bind that Huiyuan Juice has become increasingly strapped for resources. Sacrificing Downstream to Preserve Upstream: A Sound Choice If selling the juice business was the best option six years ago, it may still be a top-tier consideration today. Pushing Downstream Offers Little Room for Growth. Over the past six years, Huiyuan has not lacked effort, but results show only a modest gain in 100% juice market share from 52% to 56.5%, while medium-concentration juice share fell from 45.6% to 42.7%, and low-concentration juice, which had 5.4% share, dropped to just 2.1%. The low- and medium-concentration juice market is driven by taste, brand, and price, where Huiyuan is just one of many followers behind beverage giants. Recent new products focusing on niche flavors like hawthorn, lemon, and blueberry seem off-target, unable to out-brand the giants or out-price small competitors, making it a struggle against the current. In 2014, a market turning point emerged: with rising health and nutrition awareness, growth in low-concentration juice drinks slowed to less than 3% year-on-year. It is foreseeable that carbonated drinks' fate awaits low-concentration juice drinks. As beverage giants seek new frontiers, Huiyuan's renewed push downstream holds little promise. While 100% juice is different, bordering on premium products, Huiyuan has a relative advantage in China, but globally, that advantage is not yet pronounced, as shown in Figure 1. Moving Upstream Could Secure Control. Although technical barriers in concentrated juice production are not high, perishability and transport constraints mean producers typically locate near orchard bases or cultivate their own. China is a major fruit producer, ranking first globally since the mid-1990s, accounting for about a quarter of world output. Naturally, China's concentrated juice has some say in the global market, especially apple juice concentrate, with annual output around 1 million tons, about 60% of world total. But having a voice doesn't mean control. For instance, 70% of China's apple juice concentrate is exported, mainly by four producers: Haisheng Juice, SDIC Zhonglu, Andeli Juice, and Hengtong Juice. With similar products and scales, no clear leader exists, and overcapacity gives downstream beverage makers the upper hand. If one company could consolidate the industry, creating a situation where concentrated juice suppliers face fewer competitors, control would shift to the smaller group, and beverage makers would find it hard to substitute upstream suppliers. Divesting Downstream Lets Huiyuan Play to Its Strengths. For a company rooted in orchard bases, Huiyuan naturally has an upstream affinity and indeed holds core advantages there. In 2013, Huiyuan acquired its main raw material supplier, China Huiyuan Industry Holding Co., Ltd., for RMB 3.9 billion, gaining 380,000 tons of annual concentrated juice supply capacity. Additionally, over years of accumulation, it has linked over 10 million mu of fruit raw material bases and established over 20 fruit processing bases, forming a nationwide fruit and vegetable processing system. Returning upstream, though Huiyuan might be seen as a latecomer, its quality resources, processing capabilities, and reliable government relations make it fully capable of leading consolidation. In contrast, downstream remains a clear weakness, with issues like unfocused products, scattered channels, and outdated marketing systems long criticized. In 2013, hopes were pinned on a new professional manager with excellent sales skills to turn things around, but after implementing two major changes—restructuring sales regions and establishing a direct sales system—Huiyuan reverted to family management under Mr. Zhu within less than a year, suggesting the transformation failed. Dreams vs. Reality: A Trade-off Must Be Made If Huiyuan's fruit and agricultural ventures are Mr. Zhu's dream, then Huiyuan Juice is the reality he must face. The question of whether to sell Huiyuan Juice seems like a struggle between dream and reality, and Mr. Zhu's stance appears to have subtly shifted. In the media, six years ago, Mr. Zhu said, "A business should be raised like a son but sold like a pig." Six years later, despite frequent rumors of acquisitions by Uni-President, COFCO, or even Guangzhou Pharmaceutical's Wanglaoji, Mr. Zhu is firm: "I won't consider being acquired; I'll consider acquiring." A king's daughter never worries about marriage. Even if not Uni-President, COFCO, or Wanglaoji, many would want to acquire Huiyuan Juice. Should Huiyuan Juice still be sold today? Times have changed; the transaction price might be at most $1 billion, but strategically, selling is still advisable. As for whether to sell ultimately, I won't speculate on Mr. Zhu's attitude; he likely has his answer. 天财评论 天财评论 is a key business segment under Supergenius.cn, founded under the guidance of renowned private entrepreneur Gu Chujun. 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