On April 25, Yangyuan Beverage (603156.SH) released its Q1 2021 report, showing revenue of 2.237 billion yuan, up 75.04% year-on-year; net profit attributable to shareholders of 739 million yuan, up 40.42%; and non-GAAP net profit of 648 million yuan, up 62.83%. Regarding the significant revenue growth, Yangyuan Beverage stated that the main reasons were the low base from the pandemic and the earlier Spring Festival in the same period last year; during the reporting period, effective control of COVID-19 and the later Spring Festival led to a substantial recovery in market demand, resulting in significant revenue growth. The Q1 recovery performance shows that despite industry headwinds, Yangyuan has met consumer needs and driven steady growth through management, R&D, product, and brand upgrades, enabling the brand to transform and leap forward. "As the leader in China's plant-based protein sector, Yangyuan has clear advantages in brand effect, scale effect, channel influence, and the completeness of its entire industry chain layout," said food industry commentator Zhu Danpeng. -01- Strong E-commerce Growth; Full-Domain Upgrade May Usher in Another Development Peak Affected by COVID-19, beverage industry sales declined. According to data from the Ministry of Industry and Information Technology, from January to December 2020, revenue of beverage manufacturers above designated size nationwide was 300.73 billion yuan, down 8.6% year-on-year; output was 163.473 million tons, down 7.7%, with December output of 12.549 million tons, down 9.6%. As a result, Yangyuan Beverage's 2020 annual revenue and net profit fell 40.65% and 41.46%, respectively. However, the pandemic also brought new opportunities. In 2020, Yangyuan's e-commerce platform sales revenue increased 35.16% year-on-year. It is understood that driven by the pandemic, live-streaming e-commerce became a market growth breakthrough. Yangyuan seized the opportunity by establishing a live-streaming department and building a full-domain live-streaming matrix. On one hand, it partnered with top live-streamers like Wei Ya and Luo Yonghao to quickly drive online user traffic and sales conversion, while collaborating with MCN agencies to scale mid-tier and top-tier influencers, achieving high-frequency, high-exposure brand communication. On the other hand, it cultivated its own brand anchors and conducted public and private domain brand live-streaming activities. As a company with a solid and extensive traditional channel, Yangyuan has continuously innovated its terminal channels since last year. It has deepened and flattened operations, using downward penetration and expansion to enhance product channel penetration and quickly complete coverage of convenience store chains nationwide. At the same time, it has developed emerging channels to meet the consumption needs of various new scenarios. Additionally, Yangyuan's Six Walnut brand actively built an omni-channel e-commerce marketing system, upgraded channel strategies, deepened comprehensive e-commerce, expanded into emerging e-commerce, and developed B2B e-commerce channels to improve overall channel operations. Centered on creating value for consumers, it delved into consumer pain points, optimized e-commerce product structures, refined new product promotion models, shifted from product-centric to user-centric, built an e-commerce content ecosystem, and implemented a content + scenario + social marketing system to enhance consumer interactive experience. By upgrading its marketing model from deep distribution to full-domain sales, Yangyuan minimized the market impact of the sudden pandemic. Industry insiders commented that in the long run, these moves are important steps for Yangyuan to lay the foundation for future rapid growth, and the full-domain upgrade of channel structure may usher in another development peak for the company. -02-
R&D Expenses Rose Another 65% in Q1; Product Innovation Surprises Continue
As the first Chinese company to achieve over 10 billion yuan in sales for a single plant-based beverage product, Yangyuan has continuously increased R&D investment. The Q1 report shows R&D expenses increased 64.38% year-on-year. Pan Xiangdong, chief economist at New Times Securities, said, "R&D is an important way for listed companies to create competitive advantages and catch up with leading enterprises, as well as to gain competitive advantages and increase company value." In the new consumption era of continuous consumer upgrading, the industry's high-level matching and satisfaction of core consumer needs is a key tool for breaking through the 'ceiling' and a growth path, which heavily depends on R&D capability. Food industry analyst Zhu Danpeng said, "Due to the pandemic, many beverage companies cut R&D expenses in 2020, but Yangyuan bucked the trend, not only demonstrating the responsibility of a leading brand but also preparing resources for product innovation." It is reported that relying on strong R&D capabilities, Yangyuan has built an 'all-around super product matrix.' In the past two years, it has launched the 'Six Walnut+' series, the anti-anxiety 'Kamuning' series, 'plant milk and plant yogurt,' and the '1L Tetra Pak' series. Recently, its blockbuster Six Walnut 2430, backed by scientific research, broke the industry's product innovation paradigm and successfully attracted attention and recognition from all sectors. It is understood that Six Walnut 2430 is developed based on a study by the Chinese Center for Disease Control and Prevention on the brain-boosting effects of walnuts. The study showed that drinking walnut milk containing 24g of walnuts daily for 30 days can improve memory. Therefore, Six Walnut 2430 is carefully formulated to produce a product with 24g of walnut nutrition per can, one can a day, making memory improvement evidence-based. It is the industry's first innovative high-end walnut milk beverage that strongly combines product strength and academic strength. According to Yangyuan personnel, in 2021, the company will continue to upgrade product taste, try various packaging forms, and adapt to consumer needs in different scenarios. At the same time, it will fully launch its second strategic product, 'Daily Yangyuan Plant Milk,' leveraging high protein, zero cholesterol, and zero lactose to meet consumer demand for high-quality plant protein beverages, and continue to strengthen its plant-based market layout. Food industry commentator Zhu Danpeng said, "As long as Yangyuan continues to innovate in omni-channel operations, new scenario innovation, and promotional forms, the opportunity to create a second major product is very large." -03- Innovative Communication Landscape; Fully Activating Brand Momentum In addition to product and channel innovation, Yangyuan has also achieved notable results in brand innovation. At the end of last year, Yangyuan established a partnership with the renowned strategy firm Hua & Hua to re-examine its brand strategy and launched a new brand logo and symbol. At the same time, it collaborated with multiple channels, including high-speed rail, print media, CCTV, major satellite TV, and 'Time's Friend,' to create a 'high-frequency, wide-coverage' brand communication landscape. For example, as the official smart partner of Hunan Satellite TV's 'Happy Camp' and the Golden Eagle Solo Theater, Six Walnut not only generated strong influence through program and celebrity interaction effects but also effectively established the brand's core value image in consumers' minds, bridging the value resonance between the brand and consumers. Through its partnership with Luo Zhenyu for the 'Time's Friend' New Year's speech, Six Walnut leveraged celebrity effect to spread its persistent brand wisdom, increased deep interaction with high-end and knowledge-seeking audiences, gained broader social recognition, and demonstrated strong brand awareness. The brand upgrade cooperation also received recognition from authoritative media. In November last year, Six Walnut was selected as a leading brand in the 'CCTV Brand Power Project,' gaining recognition from China's top media platform while leveraging CCTV's communication resources to enhance both brand awareness and influence. Yangyuan personnel said that in 2021, the company will launch a new marketing strategy for the all-media era, continuously build brand trust, reputation, youthfulness, and premium positioning, and achieve sustainable brand development while growing bigger and stronger. Now, through multi-faceted innovation in products, channels, and branding, Six Walnut has successfully gained more consumer recognition, formed high brand loyalty, and opened up broader horizons. Industry experts commented that Yangyuan has relatively mature channel and product capabilities. Facing increasingly competitive market conditions, it has built a certain brand moat. It is believed that in the future, against the backdrop of nutrition and health consumption becoming mainstream, it will achieve a new round of growth. Tips will be paid 400-2000 yuan once adopted.