What do you drink when you are sleepy or tired? Many people can think of it as Red Bull’s functional drink from Thailand. For more than 20 years, Red Bull’s hot sales and high profits in China have also attracted domestic companies to follow suit. Among them, Dongpeng Special Drink is undoubtedly the fastest.
On May 27, Dongpeng Beverage went public, becoming the first stock of functional beverages in China. On the first day of listing, Dongpeng Beverage’s share price rose 44%. As of the close of the day, the company’s market value reached 26.7 billion yuan. On June 16, Dongpeng Beverage, which once opened the daily limit, sealed the daily limit again. This is also the 14th daily limit that the stock has gone out of. At present, its market value has reached 92 billion yuan.
Established in 1987, Dongpeng Beverage was originally a state-owned and time-honored beverage company in Shenzhen. Initially, it mainly produced herbal tea and water beverages. After Red Bull entered China in 1995, it quickly opened up the functional beverage market. Soon, Dongpeng Beverage also launched Dongpeng Special Drink in 1997. However, Dongpeng Beverage was on the verge of bankruptcy due to management problems, and it was difficult to even pay wages.
At the beginning, Lin Muqin, the grassroots employees of the beverage factory, with continuous efforts, finally achieved the position of general manager of sales. In 2003, loss-making beverage factories became the first batch of pilot enterprises under the national enterprise restructuring policy. The company’s senior management planned to give priority to the transfer of company assets to internal employees. At that time, Lin Muqin, the general manager of sales, smelled a business opportunity and thought it was a big deal. Good opportunity for the field. Therefore, he and Lin Mugang took over the old factory in Dongpeng for 1.46 million yuan.
Previously, Dongpeng Beverage only relied on tea beverages with a retail price of only 1 yuan per bottle and a profit of only 3 cents. After Lin Muqin took over Dongpeng, he started with cost control and differentiated product packaging, and gradually shifted his main business to Dongpeng’s special vitamin functional beverage. At the end of 2009, Dongpeng Beverages launched Dongpeng Special Drinks in plastic bottles and officially entered the functional beverage market.
At that time, Red Bull China was already a leader in the functional beverage market, but the retail price of 6 yuan was relatively high. For many young consumers, the demand was not fully met. Lin Muqin saw the pain points in the market and hit the price tag. The market price of Dongpeng specialty beverages was only about 3 yuan. In 2012, as a model market for Dongpeng Special Drinks, Dongguan’s sales also exceeded the 100 million yuan mark, starting a national journey from then on. In terms of advertising, Lin Muqin once again learned from Red Bull. It just so happened that in 2013, Red Bull changed the slogan, “Drink Red Bull when tired and sleepy” was abandoned, and this advertisement that has been running for 8 years has already been deeply rooted in the hearts of the people. As a result, Dongpeng then issued the slogan “You must wake up and fight when you are young! Drink Dongpeng special drink when tired and sleepy”. At the same time, it signed Nicholas Tse as the brand spokesperson for Dongpeng special drink, officially with a younger brand image. Promote to the whole country. And Dongpeng Special Drink was once regarded as a “Red Bull imitator” because of its advertising slogan and packaging. Of course, Lin Muqin has also broken out his own advertising and marketing routines, such as bottle cap scanning, dust caps on bottles, and “Band-Aid” advertisements on video websites, all of which were pioneered by Dongpeng Special Drink. Lin Muqin said, “We are thinking about and studying the advertising cases of each brand in the video website every day, including the source of each advertising creative and the original intention of advertising, what kind of advertising format can resonate with consumers, and whether there are other more Good presentation method. Only by personally researching and analyzing in-depth can we dig out the truly effective forms of advertising and the truly valuable advertising content.” In 2018, Dongpeng Special Drink also replaced Red Bull as a sponsor of the Chinese Super League and increased its sports marketing efforts. In 2021, Dongpeng Special Drink will once again implant the brand in the movie “Chinatown Detective 3” to continue to seize the young consumer market. At present, Dongpeng Special Drink has become a brand second only to Red Bull in the market share of energy drinks. In 2020, the company achieved total operating income of 4.96 billion yuan, a year-on-year increase of 17.8%; net profit attributable to the parent company was 810 million yuan, a year-on-year increase of 42.3%. Among them, energy drink revenue accounted for 80.5%. Dongpeng Beverage has now formed production bases in Guangdong, Anhui, Guangxi and other major regions across the country, with more than 1,000 distributors and a sales network covering approximately 1.2 million terminal stores across the country. The rise of Dongpeng Special Drinks, in addition to the company’s own factors, is also inseparable from the boosting role of industry development. In recent years, people’s attention to food safety and health issues has led to a further increase in the market share of functional beverages. It is reported that from 2014 to 2019, the compound growth rate of energy drink sales will reach 15%, which is one of the fastest-growing sub-categories in beverages, which benefits well-known brands in the industry. Compared with the strong development of Dongpeng Special Drink, Red Bull’s development momentum in recent years does not seem to be very strong. Public information shows that in 2015 and before Red Bull’s market share in the field of functional beverages was as high as 80%, but it began to shrink in 2016, and it has fallen to 54.90% by 2020. After years of trademark disputes, Red Bull’s market share has gradually become a rising star. Cannibalize. Public information shows that my country’s energy drink industry has developed over the years. In addition to Red Bull and Dongpeng Special Drinks, many brands including Lehu, Physique Energy, Rejuvenation, and Qili have joined the competition. At the same time, with the rapid development of the industry, in recent years, large companies such as Uni-President, Amway and Yili have launched their own, which has intensified industry competition. However, many investors believe that Dongpeng Beverage has gradually distanced itself from the third and fourth largest competitors and established a brand moat. In addition, energy drinks still maintain a high growth rate of market demand, which has also led to the enthusiasm of Dongpeng Beverage’s share price. Today, with the listing of Dongpeng Beverages, Lin Muqin has become another rich man in the beverage industry. Data shows that Lin Muqin directly holds 49.74% of the company’s shares. Based on the total market value, he holds a stock market value of up to 45.7 billion yuan. In Lin Muqin’s view, the company’s listing is just another new starting point. Let us look forward to the future development of Dongpeng Special Drink
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