---
title: "Southern Black Sesame Enters Beverage Sector: Triumphant Return or a One-Way Trip?"
description: "After nearly 30 years in the black sesame paste market, Southern Black Sesame Group is venturing into the highly competitive plant-based beverage sector. Despite the low margins and intense competition, the company believes that entering this 'ocean' is necessary for long-term growth, as the paste category alone cannot sustain its performance."
author: "陆琨倩"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2015-09-21"
language: "en"
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# Southern Black Sesame Enters Beverage Sector: Triumphant Return or a One-Way Trip?

> After nearly 30 years in the black sesame paste market, Southern Black Sesame Group is venturing into the highly competitive plant-based beverage sector. Despite the low margins and intense competition, the company believes that entering this 'ocean' is necessary for long-term growth, as the paste category alone cannot sustain its performance.

********************Introduction********************
> **********Competition is better than no competition, "because no matter how well black sesame paste is made, even if it captures all market share, it remains a very small category and cannot support the long-term growth needs of a listed company's performance." A person familiar with Black Sesame analyzed to our reporter.**
After nearly 30 years of making black sesame paste, Southern Black Sesame Group Co., Ltd. ultimately felt it could no longer stay in its "small circle."
On September 15, Black Sesame disclosed its entry into the highly competitive plant-based beverage market. Chairman Wei Qingwen told reporters that without competition, there is no development. Previously, Black Sesame was rolling in a small river; now it is about to enter the ocean. "In the next 5 to 10 years, beverages will be our focus. To build core competitiveness in this field, without an investment of 2-3 billion yuan and 3-5 years, it cannot be done. The most important thing is persistence."
**Heading into Competition and Low Gross Margins**
Black Sesame developed its Southern Black Sesame Paste product in 1988 and has since held over 60% of the paste market. In the first half of 2015, revenue was 712 million yuan, with paste sales at 358 million yuan and a gross margin of 42.69%. Net profit was 40.2553 million yuan, up 23.81% year-on-year. But Wei Qingwen still calls this market a "small river."
"Since 2013, the beverage business has been considered the most important part of Black Sesame's strategic development. In our 10-billion-yuan plan, we hope beverages can contribute one-third of that capacity," said Chen Gang, deputy general manager of Black Sesame's beverage division. This time, they plan to enter the "ocean" with the new plant protein product Heihei Ru (Black Black Milk).
In Black Sesame's view, this means entering competition with the dairy industry, a different level from the black sesame field. Chen Gang bluntly stated that future competitors will be products like Yili, Telunsu, and Six Walnuts, and intense competition is already foreseeable.
As early as 2013, Black Sesame tested the beverage field, launching products like black sesame milk. In the first half of 2015, this segment generated sales revenue of 94.7119 million yuan, with a gross margin of only 33.18%, lower than the paste products in both gross and net margins. Yet Black Sesame remains optimistic about this competitive beverage field. Wei Qingwen commented, "It's not a success, nor a failure, but through these 2-3 years of experience, we have found the model for doing beverages."
This may be because competition is better than no competition. "Because no matter how well black sesame paste is made, even if it captures all market share, it remains a very small category and cannot support the long-term growth needs of a listed company's performance," a person familiar with Black Sesame analyzed to our reporter. "From an industry upgrade perspective, from milk powder to milk, from 1 billion to hundreds of billions; from instant walnut powder to ready-to-drink walnut milk, from hundreds of millions to tens of billions; from Wanglaoji granules to Wanglaoji beverage, from millions to tens of billions—this is a trend."
Entering a fiercely competitive industry may even put pressure on the company's future performance. For Wei Qingwen, he is already prepared for intense competition. "Our new products must seek market space and differentiation. In business, no input, no output. For the company, profitability is more important. If gross margin is high but sales volume is small and market share is small, the company cannot be profitable in the long run."
**Is the Blue Ocean Still There?**
Black Sesame is not the only one eyeing the plant protein beverage sector. Since this year, Coca-Cola and PepsiCo, the two carbonated beverage giants, have been making moves. In April, Coca-Cola disclosed plans to acquire Xiamen Cufu King Beverage for $400 million, while PepsiCo launched its first dairy beverage in China in August, "Quaker High-Fiber Oat Milk Beverage."
At the same time, the plant protein field has cultivated a number of domestic beverage brands, such as Chengde Lulu, which had revenue of 3.16 billion yuan in 2014. Public data for Six Walnuts shows that its performance exceeded 10 billion yuan in 2014.
In contrast, the once-popular tea beverage market is declining. Nielsen data shows that in the first half of 2015, tea beverage (excluding milk) sales volume and value both declined, as traditional tea beverages face consumer transformation. Wahaha's revenue in 2014 was 72 billion yuan, far short of its target of 102.3 billion yuan. In the overall environment, China's beverage sales growth slowed in the second quarter, down 2.8% year-on-year.
However, according to Zhu Danpeng, a commentator on China's food industry, plant protein beverages have entered a mature stage, and entering now may be a bit late. "Plant protein beverages have been cultivated in the market and category for a long time over the past five years, reaching a relatively mature stage. Growth exceeded 20% in 2012 and 2013, but from Yinlu's decline, we can see the transition from growth to maturity. Next year may enter a brand elimination period. Entering now may be a bit late; even if done well, costs will be high."
Zhu Danpeng believes that over the past decade, Black Sesame has not made outstanding progress in brand, product, channel, or consumer interaction, and its products are aging. Therefore, entering plant protein beverages now poses a great challenge for Black Sesame.
But Wei Qingwen is already prepared to invest 2 billion to 3 billion yuan in the market.
Source: FMCG Elite Club
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