Source | Pin Yin Hui Observation
The market is like the tide, ebbing and flowing, carrying away the taste memories of a generation while leaving behind profound imprints of the rise and fall of beverage empires.
In the early 1990s, China's beverage market was transitioning from a planned economy to a market economy. It was an era of heroes, but also an arena fraught with hidden dangers.
From 1993 to 2025, over thirty years, the scale of China's beverage industry expanded from less than 10 billion yuan to hundreds of billions, witnessing the rise and fall of countless brands. According to Tianyancha data, using "beverage" as a keyword and filtering by "company name" and "business scope," over 3.37 million beverage-related companies were registered during this period, but only about 1.45 million remain in existence—less than half.
Over these three decades, Xurisheng pioneered the iced tea category but faded away; Prince Milk lost its way in capital betting; "Old Huiyuan" went from being the "national juice" to owing billions; Tianwo rose to fame with honey grapefruit tea but quickly fell silent; and the eight major domestic soda brands retreated under the pressure of Coca-Cola and Pepsi.
The collective disappearance of these brands is not only an inevitable result of business competition but also a microcosm of China's consumer goods development history. Their trajectories are strikingly similar yet distinct, serving as landmark footnotes in industry evolution and collectively painting a complete picture of thirty years of turbulence in China's beverage industry.
The Sorrow of Capital Games
Capital is an accelerator for business growth, but it can also be a catalyst for brand demise. At critical stages of China's beverage industry development, the double-edged sword effect of capital was vividly demonstrated in brands like Prince Milk and Huiyuan, which gradually faded from the spotlight.
In 1996, Li Tuchun, then president of Hunan Prince Milk Group, started with 300,000 yuan and created a sales miracle in lactic acid bacteria beverages. By 2007, Prince Milk's annual sales exceeded 3 billion yuan, holding a 76.2% market share in China's lactic acid bacteria beverage market, making it the undisputed industry leader.
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However, 2007 marked a turning point in Prince Milk's fate. Facing dairy giants like Mengniu and Yili beginning to focus on the lactic acid bacteria market, Li Tuchun chose to introduce foreign capital to rapidly expand. Three major investment banks—AIM, Morgan Stanley, and Goldman Sachs—jointly injected $73 million and signed a betting agreement that would later determine the brand's fate. The agreement stipulated that if Prince Milk's performance growth fell below 30% within three years after the investment, Li Tuchun would lose control of the company.
"At that time, the entire management was immersed in blind optimism," recalled an industry insider familiar with Prince Milk's history. "They believed a 50% annual growth rate was easy, but ignored the rapidly deteriorating market competition."
After receiving the investment, Li Tuchun did not choose to consolidate his main business but instead embarked on reckless diversification. He successively entered food, condiments, children's clothing, supermarkets, and other fields, even planning to invest 3 billion yuan to build a "Prince Milk Industrial Park."
The consequences of blind expansion soon became apparent. In 2008, the global financial crisis erupted, bank credit tightened, and the melamine incident impacted the entire dairy industry, causing Prince Milk's capital chain to suddenly break. In November of the same year, the three investment banks, citing Li Tuchun's failure to meet performance targets, acquired 61.6% of Prince Milk's equity for only 450 million yuan. Li Tuchun went from founder to minority shareholder overnight.
What is even more lamentable is that the investment banks that took over lacked the ability to manage Prince Milk well. In July 2010, Prince Milk was revealed to have suffered huge losses of 2.6 billion yuan, forcing the three investment banks to sell their equity to the Changsha municipal government. A year later, Xinhuayao Holdings and Sanyuan Co., Ltd. jointly took over, but the former lactic acid bacteria giant was beyond redemption.
Similar to Prince Milk's decline, the capital story of "Old Huiyuan" is equally regrettable. In 2008, Coca-Cola offered a sky-high price of 17.92 billion Hong Kong dollars to fully acquire Huiyuan Juice. This price was equivalent to three times Huiyuan's market value at the time, which was undoubtedly tempting for founder Zhu Xinli.
To meet the acquisition conditions, Zhu Xinli made a series of self-destructive decisions. He drastically reduced the sales team, cutting employees from nearly 10,000 to less than 5,000, and sales personnel from over 3,900 to less than 1,200.
Moreover, Huiyuan abandoned many established sales channels. "At that time, the company required us to voluntarily terminate cooperation with some distributors because Coca-Cola had its own channel system," revealed a former Huiyuan regional manager. "We essentially crippled ourselves."
However, this seemingly certain deal was ultimately vetoed by the Ministry of Commerce for violating the Anti-Monopoly Law. On the day the news was announced, Huiyuan Juice's stock price plummeted, falling more than 50% in a single day. By then, Huiyuan was severely weakened, its sales system was fragmented, and its channel relationships were badly damaged. Meanwhile, Zhu Xinli had already shifted his focus to building upstream fruit planting bases, missing the optimal window to rebuild the sales network.
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Starting in 2011, Huiyuan Juice suffered six consecutive years of net losses excluding non-recurring items, with total liabilities reaching a staggering 11.4 billion yuan in 2017. After more than a decade of struggle, Huiyuan Juice was finally delisted from the Hong Kong Stock Exchange in 2021, ending its capital market journey. It wasn't until 2022 that Shanghai Wensheng Assets became the restructuring investor, promoting Huiyuan's rebirth through focusing on its main business, product upgrades, and channel innovation. Since then, China's beverage market has welcomed a "New Huiyuan."
A seasoned industry commentator noted: "China's first-generation beverage entrepreneurs often had too simplistic an understanding of capital operations. They saw the power of capital but underestimated the unspoken rules such as betting agreements, acquisition traps, and short-term performance pressure."
The cases of Prince Milk and Huiyuan demonstrate that capital can be wings for a company's takeoff, but it can also be the gravedigger of a brand. This serves as a warning to more Chinese beverage companies: when dancing with capital, they must maintain sufficient strategic focus and risk awareness, or they may easily lose their way under the temptation of capital.
The Predicament of Strategic Confusion
Vague and wavering strategic positioning is another important reason for the downfall of Chinese beverage brands. At the crossroads of specialization and diversification, focus and expansion, many brands chose the wrong path.
The case of Xurisheng, the pioneer of iced tea, is one of the most regrettable chapters in Chinese beverage history. This brand, which once created the iced tea category in China, ultimately fell on the battlefield it had opened.
In 1993, the predecessor of Xurisheng Group, Jizhou Supply and Marketing Cooperative, founded the Xurisheng brand. By innovatively introducing the international concept of iced tea to China, Xurisheng quickly opened up the market. By 1999, Xurisheng's annual sales exceeded 3 billion yuan, and at its peak, it held a 70% share of the tea beverage market.
However, success came too quickly, causing Xurisheng's management to lose their way. In 2000, Master Kong launched a series of tea beverages in the mainland market. This prompted Xurisheng, aware of the crisis, to expand blindly, extending its product line from iced tea to oolong tea, green tea, juice, and other categories, while frantically establishing production bases across the country.
By 2002, Xurisheng's market share had plummeted from 70% to less than 30%, and in the second half of the year, it completely stopped distribution. In 2007, Xurisheng declared bankruptcy, and an iced tea empire collapsed.
Huiyuan Juice also experienced painful wavering in strategic positioning. Before acquiring Xurisheng, Huiyuan had already attempted multiple diversification efforts, including purified water, tea beverages, and dairy products, but none succeeded.
In 2011, Huiyuan acquired the bankrupt Xurisheng for 12.01 million yuan, attempting to enter the tea beverage market through brand revival. However, this strategy was questioned from the start.
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"Huiyuan's core competitiveness lies in juice, especially in the 100% juice segment," analyzed an industry insider. "Tea beverages are a completely different track, requiring different channels, marketing methods, and consumer insights."
Sure enough, after acquiring Xurisheng, Huiyuan fell into a dilemma: if it invested substantial resources to compete head-on with tea beverage giants like Uni-President and Master Kong, it would inevitably divert investment from its juice main business; if it operated Xurisheng as a marginal brand, it would struggle to survive in the fiercely competitive market. At the end of 2013, Huiyuan had to announce the temporary suspension of Xurisheng production, admitting the failure of this diversification attempt.
As strategic management experts have said: "Chinese beverage companies often make the mistake of overestimating the power of brand extension and underestimating the value of professional construction. When a company succeeds in one field, it often believes it can replicate that success in other fields, ignoring the essential differences between categories."
The cases of Xurisheng and Huiyuan further prove that the core of strategic positioning lies in finding a balance between specialization and diversification. Blind expansion before establishing sufficient core competitiveness often leads to resource dispersion and loss of strategic control.
The Failure to Adapt to Market Changes
Market changes never follow human will. Changes in consumer tastes, reshaping of competitive landscapes, and the rise of new channels all test the adaptability of beverage companies. Looking back, over the past thirty years, some once-glorious brands faded away because they failed to adjust their strategies in time. Among them, the rise and fall of Tianwo International is the most typical case of failure to adapt to market changes.
In 2013, Tianwo leveraged its hit product, honey grapefruit tea, and quickly opened up the market through Fan Bingbing's endorsement and sponsorship of Hunan Satellite TV's "Best of the Best." In the first year of listing, Tianwo International's revenue exceeded 4.725 billion yuan, with honey grapefruit tea alone contributing over 60% of sales. From 2014 to 2017, Tianwo International's annual revenue remained stable at over 5 billion yuan.
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However, this model of over-reliance on a single product carried enormous risks. As competitors like Uni-President and Master Kong launched similar products, and new-style tea beverage brands like Heytea and Naixue Tea rose, the market share of honey grapefruit tea began to be gradually eroded.
"Tianwo's problem was that it put all its eggs in one basket," analyzed a management consultant. "Consumer tastes had already changed, but Tianwo failed to launch new hit products to take over."
More fatally, in 2018, Tianwo International revealed several unusual transactions totaling 2.135 billion yuan. The company's board subsequently claimed it was unaware of these transactions, founder Lin Jianhua was taken away for investigation, and the company's operations came to a standstill.
In 2018, Tianwo International achieved revenue of 1.548 billion yuan, a year-on-year decline of 69.2%; net loss reached 4.173 billion yuan. After more than two years of struggle, Tianwo International was finally delisted from the Hong Kong Stock Exchange in 2020.
The decline of the eight major domestic soda brands is another typical case of failure to adapt to market changes. In the early 1990s, many local cola brands emerged across China, including Beibingyang, Asia Soda, Tianfu Cola, and Bawangsi. These local soda brands mostly relied on local resource advantages and competed with Coca-Cola and Pepsi through low-price strategies.
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However, in 1994, the China National Light Industry Council required local beverage factories to actively cooperate with "Two Colas" (Coca-Cola and Pepsi), leading seven of the "Eight Major Soda Factories" to sign joint venture agreements with them. This resulted in their eventual shelving and gradual withdrawal from the market, creating the regrettable event known as "Two Colas Flooding Seven Armies." Although these domestic soda brands have shown signs of resurgence today, their products have clearly lost appeal to consumers.
From Prince Milk to Xurisheng, from Tianwo International to the eight major domestic sodas... The decline trajectories of these brands reveal a striking commonality: those that exited the stage either had a single product structure that couldn't withstand competitive shocks, or made strategic decision errors that missed transformation opportunities. In a rapidly changing consumer environment, such rigid thinking is undoubtedly fatal.
Currently, China's beverage market is undergoing a new round of transformation with the rapid rise of brands like Genki Forest. New consumption trends, new retail channels, and new marketing methods are continuously reshaping the industry landscape. The stories of those brands that have left the center stage remind later entrants: only by maintaining keen market insight, continuously innovating and seeking change, and keeping pace with the times can one continue running in this marathon without an end.