The protracted 'Red Bull War' has dragged on for years, with Red Bull's Thai brand owner and its Chinese distributor locked in a bitter dispute. The biggest beneficiary has been Dongpeng Beverage (hereafter 'Dongpeng'). In 2003, Dongpeng was a state-owned small factory on the verge of bankruptcy. In 2009, it rode on Red Bull's shoulders and embarked on a path of grassroots counterattack. In May 2021, Dongpeng overtook Red Bull to list on the A-share market, becoming the first energy drink stock in China, surging 44% on its debut. 'Over the past five years, our average revenue growth rate has exceeded 29%, and our average net profit growth rate over five years has exceeded 50%,' said Dongpeng's helmsman Lin Muqin proudly this May. All those years of rummaging through trash bins at highway service areas were not in vain. 'It's a wake-up call, and I dare not slack off for a moment,' he said. Standing at a crossroads, Dongpeng has waited for the opportunity of its rivals' mistakes, but to defeat the strong with the weak, is it truly ready? Crossing the River by Feeling the Red Bull Stones If Lin Muqin had not been the factory director of the Huabin Red Bull OEM plant, Dongpeng might still be a small factory selling cheap chrysanthemum drinks. In 1988, 24-year-old Lin Muqin resigned from his stable job as a technician at Shenzhen Building Materials Industry Group and joined Shenzhen Aolin Natural Beverage Company. From production line team leader to workshop production management, and then to technical, procurement, and sales positions, over nine years he became thoroughly familiar with the beverage industry's operations. Later, he became the factory director of the Shenzhen Red Bull beverage OEM plant. This brief connection, however, bound his later life tightly to Red Bull. In March 1997, he joined Dongpeng Beverage, a state-owned time-honored brand producing soy milk and cooling drinks, as deputy general manager. To help the company reverse its decline, in 1998, Dongpeng imitated Red Bull and launched a functional drink, aiming to grab a share of the more profitable market. Reality gave Lin Muqin a rude awakening. The 'copycat' Dongpeng Special Drink was completely ignored and was forced to withdraw from the market, and Dongpeng's transformation came to an abrupt end. Amid fierce competition from Chinese and foreign beverage companies, the company went from bad to worse. In 2003, Dongpeng's turnover was less than 20 million yuan, and it couldn't even pay its employees' wages, with the factory on the verge of bankruptcy. That year, the state allowed state-owned capital to withdraw from generally competitive industries, and Lin Muqin was eager to take over the company. There were two paths to taking over Dongpeng: one was to buy the company's over 20,000 square meters of land and factory buildings (in Shenzhen, where land is at a premium, this was definitely a great opportunity to get rich, but Lin Muqin could only afford a small stake with all his savings, and he wouldn't have control); the other was to buy the brand and production equipment and continue making beverages (though the future was uncertain, he could take the lead in this option). As a Chaoshan native, the belief 'Better to sleep on the floor than to be someone else's boss' was written in his bones. He invested 2.67 million yuan (holding 58.04% of shares) and became the new chairman of Dongpeng, continuing to focus on beverage manufacturing. Why could he succeed where others had failed? First, solve the problem of survival. To achieve efficiency, one must have cost awareness. He changed the extensive management of state-owned enterprises, controlling costs from raw materials to processes, products, and sales, precise to the 'li' (a unit of currency) level. If all the money saved went into Lin Muqin's own pocket, Dongpeng would still be a stagnant pool. To break through in competition, these 'profits' had to be distributed. Only then could cost control become a weapon for the enterprise. For the 1-yuan box of chrysanthemum tea, each box had only two or three cents of profit, and any slight mistake would lead to losses. They danced on the edge of a sharp knife, maximizing profit-sharing, not only completing the initial capital accumulation but also training a capable team. Then solve the problem of development. Lin Muqin said, 'During those days, the two things I cared about most were how to control costs and how to gain insight into consumer needs and enter new tracks.' In 2008, Red Bull, riding the Olympic wave, saw sales exceed 5.5 billion yuan. Lin Muqin's old dream of functional drinks was rekindled. How could Lin Muqin, who had already failed, guarantee success this time? In the six years since taking over Dongpeng, he had used the sword of cost control to gradually carve out his own channels. So when he launched Dongpeng Special Drink again, he chose a new path based on his existing advantages. Red Bull, which in Thailand uses a low-price strategy to provide energy supplements for manual laborers, sells for as much as 6 yuan per bottle in China, targeting high-end venues like bars and nightclubs. If Dongpeng was cheap enough, under Red Bull's market education, sales should not be a worry. How to ensure it was cheap enough while still profitable? Through repeated calculations, Lin Muqin abandoned the aluminum can and chose PET plastic bottle packaging, adding a dust-proof cap to make it look more premium than ordinary drinks. In 2009, Dongpeng Special Drink was launched at a retail price of 3.5 yuan per bottle. This time, it chose a flank attack, targeting the mid-market where Red Bull had no presence, using a 'rural areas surround the cities' approach to begin its second battle. The Second Battle of Functional Drinks How to ensure Dongpeng's second battle was not blind? Lin Muqin avoided Shenzhen, which was crowded with experts, and used the nearby city of Dongguan as a 'vanguard' to test the market and train the team. 'If we can't achieve 100 million yuan, we won't go out,' he began to lead the team to tackle the Dongguan market. Dongpeng targeted price-sensitive users such as drivers, blue-collar workers, and couriers. Although priced at 3.5 yuan, promotional activities like buy-one-get-one-free always allowed users to buy the product at a cheaper price. The addictive refreshing drink, low price, explosive growth of Dongguan's migrant worker population, and continuous channel expansion led Dongpeng Special Drink's sales in Dongguan to exceed the 100 million yuan mark in 2012. That year, Red Bull's sales had already exceeded 10 billion yuan. In 2013, Dali's Lehu and Wahaha's functional drink Qili were launched. Dongpeng also began its national expansion amid intense competition. Red Bull's absolute brand advantage and the traditional channel advantages of Dali and Wahaha cast a shadow over Dongpeng's path to breakthrough. With many competitors and little product differentiation, brand power and channel power became the keys to victory. In 2013, Dongpeng invited Nicholas Tse to endorse the brand and ran advertisements on national media such as CCTV. The slogan directly copied Red Bull's 'Tired and sleepy? Drink Red Bull,' and was set as 'Tired, sleepy? Drink Dongpeng Special Drink.' Lin Muqin didn't have sufficient ammunition; the 3 million Hong Kong dollars for Nicholas Tse's endorsement were borrowed. But the functional drink track was becoming increasingly noisy, and this was a life-and-death race to capture consumer mindshare. Not participating meant missing the opportunity to occupy consumers' minds. In addition to advertising investment, expanding territory required a comprehensive brand and channel strategy. To sell to laborers, it was necessary to deeply bind with consumption scenarios. Service areas are the main consumption scenario for long-haul truck drivers. Determined to go deep into service areas, Lin Muqin would rummage through trash bins at every service area he visited, precisely to see if he was deeply bound to the scenario. In 2014, Red Bull's sales exceeded 20 billion yuan. Facing a vast market space, he decided to go deep and wide simultaneously. In 2015, Dongpeng began its 'brand rejuvenation' strategy. The slogan 'If you're young, you have to fight to stay awake' added spiritual needs beyond the physical needs of drinks, continuing to tap into brand potential. The product's consumption scenarios expanded from the necessity of overtime work to leisure, entertainment, and sports competitions. Dongpeng also seized the dividend of the growing e-sports user base, binding with e-sports consumption scenarios like internet cafes. Relying on mid-range pricing, buy-and-give promotions, and other strategies, Dongpeng's sales personnel went deep into scenarios such as internet cafes, KTVs, service areas, factory stores, and tourist attractions, grabbing freezers and display spaces. But as sales areas expanded, problems of cross-regional selling and market chaos began to emerge, and the promotions that had driven the company's expansion also began to have issues. The buy-and-give promotions had obvious pull effects, but the costs of labor, warehousing, distribution, and verification were high, the cycle was long, and uncontrollable. The activity process was complex, and consumer participation was low. Moreover, if problems occurred after the activity went live, they couldn't be adjusted in time, easily causing the company to miss opportunities and weaken brand-building effects. If it could master the flow of every product in the channel, Dongpeng's channel control and flexibility would naturally be greatly enhanced; if it could communicate directly with all stores, adjusting marketing strategies would become easy; if it could interact directly with consumers, the company's brand building would inevitably be more effective with less effort. How to achieve this? In 2015, Dongpeng, two to three years ahead of the industry, launched a one-item-one-code system for refined management of all its products. In 2016, the company launched WeChat cash red envelopes via QR codes, and in 2018, it launched the 'One Yuan Joy' exchange, with subsequent activity upgrades all based on this. It gave each bottle cap a dedicated QR code, and each box of products had corresponding outer box codes and inner box codes. The stacks of boxes during transportation also had stack codes (linked to box codes). The company established a product management system where the entire process from product outbound, inbound, shipping, multi-level transportation to distributors was registered by scanning codes. With data support, Dongpeng could quickly detect abnormal situations like cross-regional selling and precisely identify the problem link. After products were launched, how could refined management of stores and consumers be achieved? If stores could scan the inner box code after opening the box, and consumers could scan the cap code after purchase, Dongpeng could achieve more precise channel management. But among China's 7.8 million terminal stores, most operators are older and less willing to scan codes. The company offered a 0.5 yuan cash reward for scanning, similar to the price of selling waste cardboard boxes, but compared to selling waste, scanning codes seemed less troublesome. Additionally, scanning could earn 'One Yuan Joy' redemption quotas, so stores had to scan to participate in promotions. The company developed a store mini-program and a consumer platform to facilitate participation for both parties. If consumers redeemed winning caps at stores, they could buy an additional bottle of Dongpeng Special Drink for 1 yuan, and the store could receive the user's 1 yuan redemption payment and a 1.58 yuan cash red envelope + return goods coupon from the brand. With a 30% winning probability (up to 50% in some cases), the overall terminal gross profit for stores reached 46%, greatly increasing product circulation speed and shelf placement rate. The one-bottle-one-code also solved the problem of fake caps, because distributors didn't know which products had prizes. The redemption process also changed from individual verification by salespeople to centralized verification after collecting caps, using Dongpeng's invented 'cap point device' for automatic QR code verification, automatically eliminating fake and already-verified caps, then syncing data to the order system for distribution. The one-item-one-code allowed Dongpeng to digitize promotional expenses, control real redemption data, and adjust marketing strategies in real time. Promotional information and costs were directly published to stores via Pengxun Cloud Business, avoiding layers of deductions in the middle. Consumer data accumulation also fed back into precision marketing. Based on the one-item-one-code, Dongpeng started by connecting C (consumers), influencing small b (stores), solving sell-through, connecting small b, promoting big B (channel distributors), and thus building an F2B2b2C marketing digitalization system, making promotions the best form of full-chain reach and user connection. In addition, Dongpeng also seized the shift to online channels, continuously expanding on traditional e-commerce, Douyin, Kuaishou, and Bilibili, striving to break out of its circle. The Road Ahead Is Long In an editorial, the Nikkei once summarized three conditions necessary for a weak enterprise to defeat a strong competitor: first, the challenger's technological innovation; second, a free market mechanism that evaluates the enterprise's efforts; third, the competitor's mistakes. Taking advantage of Red Bull's trademark dispute, Dongpeng completed its listing first and, based on its deep cultivation of South Guangdong, began to compete nationwide. From 2011 to 2021, Red Bull's market share fell from 89.60% to 52.20%, Lehu only increased from 3.10% in 2013 to 8.10% in 2021, while Dongpeng rose from 3.90% to 16.70%. In 2020 and 2021, Dongpeng ranked first in domestic energy drink sales (in tons). On June 18, 2021, its market value even exceeded 100 billion yuan. But Lin Muqin understood that 'Dongpeng is not yet a national brand.' In 2017, Dongpeng's expansion suffered setbacks in the north. He went north many times, visiting small shops and large supermarkets, chatting with office workers and truck drivers, and finally launched a 500ml large bottle, which opened up the northern market. But from 2018 to 2021, its sales share in Guangdong still accounted for 61.10%, 60.12%, 55.74%, and 45.94% respectively. As of the end of 2021, Dongpeng's sales network covered about 2.09 million terminal stores nationwide, about a quarter of all terminals. In many regions, its outlets were sparse, and in townships, it had almost no presence. The functional drink track has become increasingly crowded. Now that carbonated and juice drinks are declining, and coffee and tea drinks have shortcomings in consumption habits and refreshing power, functional drinks have become a hot commodity. Besides well-known brands like Coca-Cola's Monster, Tizhi Nengliang, and Zhanma, there are also Tongyi's Gouran, Amway's XS, and Yili's Huanxingyuan. Facing red ocean competition, Dongpeng's big single product strategy and strategic focus allowed it to quickly surpass Dali's Lehu. But the lessons of Chengde Lulu, Yangyuan ZhiPin, and Huiyuan Juice, and the fickle young consumers, made its dependence on big single products a weakness. In 2021, Dongpeng launched 'Dongpeng 0 Sugar Special Drink,' low-sugar coffee drinks, 'Ta Neng' (She Can), and other products, attempting diversification. Without an absolute advantage in channels, the company's move toward platform development is bound to be tested. The rise of Dongpeng Special Drink cannot be separated from real investment in the market, and creating another big single product is not easy. Dongpeng, which emphasizes marketing over R&D, also faces questions about its lack of core competitiveness. From 2018 to 2021, its promotional and publicity expenses were 543 million, 430 million, 407 million, and 654 million yuan. But its R&D expenses were only 22 million, 28 million, 36 million, and 43 million yuan. Moreover, Dongpeng, which has always focused on ultra-high cost performance, will face a tough challenge in future brand upgrading. To truly complete the story of defeating the strong with the weak, Dongpeng needs more technological investment and greater effort.