What do you drink when you are sleepy or tired? Many people can think of it as Red Bull’s functional drink from Thailand. Over the past 20 years, Red Bull’s hot sales in China and high profits have also attracted a large number of domestic companies to follow suit.
Nowadays, in the Chinese beverage market, there has been an energy drink second only to Red Bull, and it has been listed in the A-share market at the end of May, becoming the “first share of functional drinks” with an annual revenue of nearly 5 billion. It is called ” The Dongpeng drink behind the Dongpeng special drink which is highly imitation of Red Bull.
As of the close on June 11, the share price of Dongpeng Beverage has reached 190 yuan, with a market value of 76 billion yuan, while the issue price on May 27 was only 46.27 yuan, and the market valuation was 18.5 billion yuan. In other words, In just 16 days, the market value of Dongpeng Special Drink has increased by nearly 58 billion.
The actual controller Lin Muqin’s shareholding ratio is 50.74%. Now converted into net worth, his shareholding value is as high as 38.5 billion yuan.
Why did Dongpeng Special Drink take the road of “high imitation Red Bull”? This is related to the experience of Lin Muqin, the founder of Dongpeng.
The predecessor of Dongpeng Beverage Group was Dongpeng Industry, which was established in 1987. This old state-owned beverage factory mainly produces herbal tea and water beverages. After Red Bull entered China in 1995, it quickly opened up the functional beverage market. Soon, Dongpeng Beverage also followed suit and launched Dongpeng Special Drink in 1997.
But at this time, Dongpeng Beverage is a small factory on the verge of bankruptcy, with an annual output value of 20 million yuan. Because of its poor profitability, let alone promoting new products, it is very difficult to even pay wages. Until 2003, Dongpeng Beverage ushered in the private reform, and the privatization of factory assets was the priority for internal employees.
At that time, Lin Muqin was the general manager of sales in the factory. He thought this was a good opportunity for a big fight. So, he and the two brothers Lin Mugang spent 1.46 million yuan together to take over the old Dongpeng factory.
Before taking the post of Dongpeng Beverages, Lin Muqin also served as the director of Red Bull’s foundry. Therefore, he has a better understanding of the procurement, technology, and sales of the functional beverage market. After taking over Dongpeng Beverages, he settled for a few years. In 2009, he launched Dongpeng Special Drinks in plastic bottles, intending to enter the functional beverage market with all his strength. In 2013, Nicholas Tse was signed as the brand spokesperson for Dongpeng Special Drinks, and the brand was officially promoted nationwide with a younger brand image.
At that time, only Red Bull took the lead in the domestic functional beverage market. Although there were brands such as Sainiu, Wangniu, and Lehu competing for the second place in the market, they basically followed the low-end route, with a market price of 3 yuan. Around, it’s only half the price of Red Bull. In order to get to the top as soon as possible, Lin Muqin decided to take advantage of the “bull” in brand marketing in addition to differentiation in price and packaging.
In 2013, Red Bull iterated the slogan, and “Drink Red Bull when tired and sleepy” was abandoned. But this slogan, which has been used for 8 years, has been deeply rooted in the hearts of the people. So, Dongpeng special drink painted a gourd, and then shouted, “You must wake up and fight when you are young! Drink Dongpeng special drink when you are tired.”
It is this high imitation slogan that makes Dongpeng Special Drink wear the “high imitation Red Bull” hat.
In the following years, because of the slogan and Red Bull’s Dongpeng special drink, it began to vigorously market through celebrity endorsements, film and television placements, and the World Cup. It soon became a market in third- and fourth-tier cities with more affordable prices, and not only became Red Bull. The cheap alternative version of, has also sat on the market’s second place as hoped.
The rapid development of Dongpeng Beverages is inseparable from the trend of energy drinks in the world. Since the huge success of Monster Beverages in the United States in 2002, energy drinks have become popular in Europe and the United States and swept across Asia.
According to the Pacific Securities Research Report, between 2014 and 2019, the size of my country’s functional beverage market increased by 125%, from 58 billion yuan to 111.9 billion yuan, becoming the third largest beverage market in the beverage industry.
Among them, Red Bull steadily ranks first with a market share of 57%, Dongpeng Special Drinks occupies 15% of the market share, and Lehu occupies 10% of the market. The development potential of the entire market is very considerable, and the gross profit margin of energy drinks is relatively high. .
However, the original low-price strategy also laid hidden dangers for Dongpeng Special Drinks, which not only failed to test the high-end market, but also exposed the problem of too single category.
In 2017, Dongpeng Special Drinks tried high-end products and launched 250ML gold cans, priced at 3.6 yuan, and wanted to enter the high-end market, but its own 500ML plastic bottle version became the biggest obstacle, and it has been reduced to 2.3 yuan per can. .
According to data from its prospectus, Dongpeng Special Drink’s revenue in the first quarter of 2021 was 1.711 billion yuan, a year-on-year increase of 83.37%, and its net profit was 342 million yuan, a year-on-year increase of 122.52%. This performance growth is precisely dependent on Dongpeng Specialty. The sales volume of 500ml gold bottles.
At the same time, the sales of other beverage categories under Dongpeng Beverage are relatively poor. From 2018 to 2020, the performance of Dongpeng Beverage’s functional beverages has increased year by year, respectively 2.886 billion yuan, 4.003 billion yuan, and 4.655 billion yuan. Yuan, which accounts for more than 90% of the company’s total revenue annually.
Although the strength of Red Bull is very different, many investors believe that Dongpeng Beverage has gradually widened the distance from the third and fourth competitors, and has established a brand moat. In addition, energy drinks still maintain high market demand. The growth rate, which has also led to the continuous speculation of Dongpeng Beverage’s share price.
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