Bingfeng backed down before passing review and withdrew its IPO application. In fact, domestic soda brands that once had hopes of going public include not only Bingfeng but also Beibingyang and Jianlibao. However, none have made further progress. Besides the above brands, there are other well-regarded regional domestic soda brands such as Dayao, Hankou No.2 Factory, Huayang 1982, and Future Cola. Some have achieved certain results, such as Dayao, which achieved sales of about 3 billion yuan relying on the northern market, and Beibingyang, which reached a scale of 1 billion yuan and has expanded in East and Southwest China. But from Beibingyang's return in 2011 to Bingfeng's attempt to go public, after more than a decade of development, domestic sodas still have not produced a truly national brand. Compared with Coca-Cola and Pepsi's tens of billions in scale, they are still insignificant. Below, we will review the "past and present" of these domestic sodas and try to find the reasons why they always seem to stall. Bingfeng: A Visible Ceiling In July 2021, Bingfeng formally submitted its listing application. In December of the same year, the CSRC responded to its IPO application on its official website, raising 54 questions involving the company's growth, compatibility with industry development, related-party transactions, potential benefit transfers, and revenue recognition policies under sales models. Bingfeng's biggest problem is product singularity. Besides orange soda (carbonated beverage), Bingfeng's products include sour plum drink, canned original flavor, grapefruit flavor, and rose lychee flavored Fu tea. But the most purchased product in the market is orange soda. Data shows that Bingfeng's orange soda (including glass bottle and can) has cumulative sales of 756 million bottles/cans, with revenues of 250 million yuan, 250 million yuan, and 270 million yuan, accounting for 86.3%, 84.3%, and 81.4% of main business revenue respectively. Of course, selling a single product worldwide can still have a large market, but Bingfeng's main market is in Shaanxi, so its ceiling is visible at a glance. From 2018 to the first half of 2021, Bingfeng's revenue in the Shaanxi market was 249 million yuan, 245 million yuan, 266 million yuan, and 170 million yuan, accounting for 87.44%, 81.73%, 80.23%, and 77.79% of main business revenue in each period. With the national market divided by Coca-Cola, Pepsi, Master Kong, Uni-President, and other brands, and other regional brands occupying their own territories, where Bingfeng's growth lies is probably unclear even to Bingfeng's own people. Of course, Bingfeng has not lost out. Through rounds of media reports, Bingfeng has attracted the attention of investors nationwide. Coupled with the sponsorship of the 2021 National Games, whether Bingfeng can "break the ice" remains to be seen. The company's ceiling is pressing down from above; applying for an IPO was indeed a courageous move for Bingfeng.
Beibingyang: Facing New Choices
Beibingyang also had the opportunity to go public. In November 2020, Da Hao Technology announced that it was planning to purchase 100% of the equity of Beijing Yiqing Asset Management Co., Ltd. held by its controlling shareholder Yiqing Holdings by issuing shares. Yiqing Asset Management planned to inject "Red Star" brand liquor series, "Beibingyang" brand beverage products, and "Yili" brand food products. If successful, Beibingyang would also achieve a backdoor listing. This would be a boost for Beibingyang, which is expanding nationwide. However, after Da Hao Technology's asset restructuring plan was subject to a second inquiry by the Shanghai Stock Exchange, approved by the Beijing State-owned Assets Supervision and Administration Commission, and accepted by the CSRC, on August 20, 2021, the Beijing Tiantian Law Firm hired by Da Hao Technology for the restructuring was placed under investigation by the CSRC for legal services provided to other companies, and the transaction review was suspended. Beibingyang returned to Yiqing Holdings from Pepsi in 2007, and in 2011, under the leadership of General Manager Li Qi, launched new products. Because they still used the familiar glass bottles and the big white bear, they quickly became popular. Beibingyang is a traditional Beijing brand with stronger consumer recognition. It has built its own factories in Anhui and Chongqing, launched many new products, and has annual sales of nearly 1 billion yuan, making it a iconic product of national soda. But with the rise of domestic sodas, Beibingyang has been impacted by products like Dayao in the northern market and has lost significant share in the foodservice market. Whether to lower its stance and engage in direct competition, or maintain its nostalgic and premium strategy, Beibingyang faces new choices.
Dayao: Quietly Making Big Money
Some estimate that Dayao's annual sales revenue is around 3 billion yuan. But many people may not have heard of the Dayao brand. It is mainly seen in mid-to-low-end restaurants in the northern market and is gradually expanding into supermarkets. It is almost invisible in the southern market. In the northern market, Dayao has become a model for many small brands to imitate. Recently, Dayao released multiple judgments in infringement cases in one day, involving regions including Gansu, Ningxia, Shandong, Inner Mongolia, Liaoning, Shaanxi, and Beijing. The Dayao soda brand originated in Inner Mongolia and has a history of over 30 years. In 2006, the Bayi Beverage Factory was restructured into Hohhot Dayao Food Factory, and in 2014, two production bases in Inner Mongolia and Ningxia were expanded. In 2018, it began national expansion, initially focusing on the Northeast and Northwest markets. In 2020, five more production bases were added, and products began covering over 300,000 terminal outlets in 25 provinces, municipalities, and autonomous regions. Dayao's traditional products are Dayao Jiabin and Dayao Chengnuo. Relying on these two low-priced, high-volume products, Dayao carved out a territory in the northern market. Industry insiders believe this is closely related to the current trend of national trend revival and consumption stratification, as consumers are more budget-conscious, so Dayao has also begun to lay out mid-to-high-end products and enter the ready-to-drink market, launching PET bottle products and adding new flavors such as "Dayao Zhagi", "Dayao Lixiang", "Chayuanxiang Juice Sparkling Tea", "Qusode Soda Sparkling Water", "Sai Bei Shan Quan", and "Dayao Guoqi" series.
Hankou No.2 Factory: From Red to Black
The return of national trend sodas began with Beibingyang and flourished with Hankou No.2 Factory. In 2019, news about Hankou No.2 Factory's national trend bottles, high prices, and financing was everywhere, attracting much attention. But in the past two years, there has been no further financing news. Not many new products have been added. Reports show that some distributors of Hankou No.2 Factory withdrew due to difficulty in selling caused by high prices. The unit price is around 8 yuan per bottle. Some netizens joked: "I don't understand why they are much more expensive than Coca-Cola," and "Apart from being good-looking and ridiculously expensive, there is nothing special. At this capacity, it would be acceptable if the price dropped to 2 yuan per bottle." The reason is related to Hankou No.2 Factory's insistence on the internet celebrity route. Most of its financing was used in marketing and branding, failing to establish a supply chain system centered on its own factories and a sales-driven system. After consumers tried the products, repurchase rates declined, and C-end sales were insufficient, so the brand rose quickly and fell quickly. Currently, carbonated beverages are experiencing a rise of domestic brands, and other brands have accumulated deep strengths in supply chain, brand, and market. Hankou No.2 Factory has missed the opportunity to rise. With the bursting of the internet bubble, Hankou No.2 Factory has no factories, only a superficial marketing model, and lacks the ability to tell stories externally. It is perhaps easier to understand why capital has not followed.
Huayang 1982: The Imitator
Although Hankou No.2 Factory seems to have stalled, its national trend style influenced many companies. Among them, Huayang 1982 is the brand that imitated Hankou No.2 Factory most closely. Huayang 1982 officially debuted at the 2021 Chengdu Sugar and Wine Fair. Its booth style, product packaging colors, and product flavors are very similar to the internet celebrity Hankou No.2 Factory. In fact, Huayang 1982 is a new brand, but it was promoted by its operator as an old brand and was collectively called the "North and South Two Oceans" with Beibingyang. Reports show that Huayang 1982's operator, Niu Huan, applied to register the "Huayang" trademark on February 15, 2012, under international class 32, but the character "华" was in traditional form. The trademark for the two characters "华洋" was applied for registration in 2018. It is understood that Huayang 1982 currently mainly uses an OEM model. In its promotional video, Huayang 1982 claims that nine factories are linked, located in Henan, Hebei, Shandong, and other places. Reports show that its main bottled soda products are produced by Foshan Kalle Food Co., Ltd., which has a registered capital of 680,000 yuan and is a small and micro enterprise. The enterprise where Yu Huan serves as legal representative is Jilin Huayang Food Co., Ltd., whose subsidiaries are mainly in Henan. Huayang 1982 uses the business license and food business license of Guangzhou Huayang Beverage Co., Ltd. for external franchise recruitment. However, product testing reports are also provided by testing institutions in Henan. Additionally, Huayang 1982's franchise customer service operations are also in Henan.
Wahaha Revives Future Cola
China's best-performing soda is Wahaha's Future Cola, which once became the second-largest brand in carbonated beverages, but disappeared from public view a few years ago. In the Spring Festival of 2022, Future Cola launched new products and appeared on the Spring Festival Gala stage. In fact, Future Cola has always been around. In 2019, Wahaha stated that Future Cola had been in continuous production, with sales mainly concentrated in the central and western regions, and it was a product sold on a regular basis. However, it is basically invisible in first-tier cities, and there are many sellers on e-commerce platforms, mainly selling 500ml bottled products. In the 1990s, Wahaha's "rural surrounding city" sales strategy made Future Cola the best-selling cola product in the domestic market besides the "two colas." According to media reports, in 2001, Future Cola held a 12% share of the domestic carbonated beverage market, which increased to 16%-17% by 2006. At its peak, Future Cola's market share in second- and third-tier cities once reached as high as 30%, contributing over 2 billion yuan in annual revenue to Wahaha. But with the consumption upgrade over the past decade or so, Future Cola has struggled to break into first- and second-tier cities from third- and fourth-tier cities. Coupled with the down-market expansion of Coca-Cola, Pepsi, and other product categories, Future Cola's glory has faded. In 2022, Wahaha will use products like Future Cola to help rejuvenate the brand, conducting deeper cross-border collaborations in terms of taste, packaging, channels, and cultural significance, and extending and upgrading the brand's IP connotation. Future Cola selected four flavors through online voting: original, ginseng, oil citrus, and preserved plum, corresponding to drinking scenarios such as "staying up late to strive," "happy moments," and "fat-burning moments." Currently, the new Future Cola products focus on "sugar-free" and feature national trend design on the packaging.
Where Are the Opportunities for Domestic Soda Brands?
In addition to the above soda brands, other domestic soda brands include Shanhaiguan, Laoshan Cola, Tianfu Cola, and Bawangsi. These products are confined to their regions and are beloved by local consumers. Some entrepreneurs see the value of certain domestic brands, buy the brand, and then find OEM factories to produce under license. They do not upgrade the products, which remain "three-essence water" mixed with sweeteners, flavors, and additives. More importantly, they use the guise of national trend and nostalgia to recruit distributors nationwide, hoping to make a quick profit. If they fail to open the so-called national market, they sell the brand again without losing out. Consumers' palates have become very discerning, and health awareness is awakening. Coca-Cola recently made headlines for the double standard of not containing preservatives in Hong Kong products but containing preservatives in mainland products. This is an opportunity for domestic brands. Mainstream domestic companies are continuously upgrading and improving health standards. For example, Nongfu Spring has been using aseptic production lines for over 10 years, and its main products do not contain preservatives. Genki Forest's new factories are the same, with no preservatives added to their sparkling beverages. Wahaha is also accelerating the construction of aseptic production lines. Regional soda brands, which are not large in scale and are easy to rectify, should improve product quality and create premium products in their local markets. This not only does justice to local consumers but also has the opportunity to grow into high-priced, high-quality "specialty" brands. Source: Moose New Consumption (ID: tuolu360) Author: Wang Chen -END-