China Food

Battle of upper position: Yuanqi forest attacks Nongfu mountain spring

The confrontation between the new and old forces became more and more prominent.
How can a start-up company with a valuation of nearly 40 billion compete with an industry giant with a market value of 10 times as high? Yuanqi forest is facing this challenge.
The sales volume of Yuanqi forest in 2020 is about 2 billion yuan. After a new round of financing in March this year, it is estimated to be 6 billion US dollars. After occupying the chain convenience stores and supermarkets, Yuanqi forest gradually put the market focus on the traditional channels.
This year, Yuanqi forest is almost frantically investing in laying offline freezers. Such a move will undoubtedly occupy the territory of the traditional beverage giants, who have been based in China’s urban and rural areas for many years with broad offline channels. The first one to launch a counterattack was Nongfu Shanquan (HK: 09633), known as “nature’s money printing machine”.
As the leader of China’s packaging water industry, Nongfu Shanquan’s strong ability to make money has been revealed to the public. The popularity of the capital market once put Zhong Qiong in the position of the richest man in Asia. In contrast, as a challenger, Tang Binsen’s wealth, available resources and industry accumulation are far from each other.
Start up companies PK industry giants, it seems that the competition is not too symmetrical, but the reality may not be as simple as digital comparison. In the past two years, entrepreneurship in the field of new consumption is in the ascendant, and the Internet is doing the traditional consumer goods again in a new way. There are obvious differences in the way of expansion, market play and valuation logic between the two. The confrontation between the old and the new forces has become increasingly prominent.
Industry insiders said that the salary of Nongfu Shanquan’s employees is almost the only one in the industry that can compete with Yuanqi forest, which also reflects the fierce competition between the two companies.
Unlike packaged water, the change cycle of the beverage industry is shorter, and the tastes of consumers are also unpredictable. In terms of introducing new products to occupy the minds of consumers, all the leaders in the beverage industry have faced the problem of unfavorable new product launch. It is precisely the special characteristics of this industry that provide new players with the opportunity to overtake on the curve.
Otherwise, Nongfu mountain spring can almost ignore this unequal competition.
Yuanqi forest “sinking” for development
Yuanqi forest, which has set a sales target of 7.5 billion yuan in 2021, has no choice but to sink into the market.
In the past few years, Yuanqi forest has been one of the hottest start-ups in the field of new consumption.
Since 2017, Yuanqi forest has completed six rounds of financing in five years. After the latest round of financing in March this year, its valuation has reached US $6 billion. According to its performance in 2020, PS (market rate) has reached an amazing 18 times.
The main reason why Yuanqi forest is favored by capital is that it has the first mover advantage and consumers’ mind in the new category of sugar free drinks, especially bubble water. Sugar free drinks meet the contemporary consumers’ pursuit of health and slimming, and are generally considered to be the next super category. Yuanqi forest is the biggest beneficiary of this trend.
But compared with its actual performance, Yuanqi forest can only be said to be “under the reputation, in fact, it is difficult to match.” According to the sales target announced by Tang Binsen, founder of Yuanqi forest, at the dealers’ meeting at the end of last year, it can be estimated that its sales revenue in 2020 will be no more than 2 billion.
Tiktok Kwai’s advertisements in 2020 are all over the world. Whether it’s in variety shows, lift advertisements, or new media such as jitter, B, Xiao Hong, etc., you can see the advertisements of Yuan Yang’s forests. However, the fierce marketing campaign only brought in sales of about 2 billion yuan, and this achievement includes many categories of Yuanqi forest, such as bubble water, burning tea, milk tea, functional drinks, etc., which shows its lack of market development.
A senior investor in the consumer industry told Juchao that he believed that a successful beverage product would sell at least 3 billion yuan a year. For example, the nutrition express of Wahaha sold 10 billion yuan a year, and the tea Pi of Nongfu Shanquan sold 10 billion yuan three years. In any case, Yuanqi forest’s performance in 2020 is hardly a success.
The so-called failure, in the final analysis, is the failure of Yuanqi forest to “sink”“ “Sinking” includes two aspects, one is to go deep into the channels of low tier cities, even towns and villages, the other is to occupy the roadside of the couple shop and other small channels.
Juchao once pointed out in the previous article “the expansion problem of Yuanqi forest” that its expansion is facing the problem of market sinking. Yuanqi capital, a market research organization, once visited Liuzhou, a third tier city, and pointed out that sugar free drinks accounted for a small proportion of the shelves in the third tier cities, while there were almost no new brands on the beverage containers in the fifth tier cities.
If the first and second tier cities, convenience stores, supermarkets and other channels can support Yuanqi forest’s sales of more than 2 billion yuan, Yuanqi forest, which has set a sales target of 7.5 billion yuan in 2021, has no choice but to sink into the market.
Last year, Yuanqi forest set a goal for the Spring Festival, putting 80000 freezers into the offline market. Since this year, Yuanqi forest has been almost frantically laying freezers in traditional offline channels. It is reported that Yuanqi forest rewards 200 yuan for each freezer and 100 yuan for the supervisor. Tens of thousands of freezers pour out at one time, occupying traditional channels such as restaurants and canteens.
According to public information, Yuanqi forest will continue to cultivate in more than 1.5 million outlets in the first and second tier cities.
However, the space of the terminal is limited after all, so it is inevitable that the freezer of Yuanqi forest will grab the position of other brands, especially the wide-ranging offline layout of uni president, Master Kong, Nongfu Shanquan and Coca Cola. When the freezers of other manufacturers were returned by the channel, they began to be ready for the challenge of Yuanqi forest, and the first one to launch the confrontation was Nongfu Shanquan.
Nongfu mountain spring
Yuanqi forest’s plan to launch 80000 freezers has eroded the basic plate of Nongfu mountain spring.
The main business of Nongfu mountain spring is still packaging water, but several main categories of Yuanqi forest almost compete with Nongfu mountain spring – bubble water, Yuanqi forest benchmarking TOT and other two new bubble water products, functional beverage alien benchmarking scream, energy emperor, sugar free tea benchmarking Oriental leaves.
Yuanqi forest’s plan to put in 80000 freezers has eroded the basic plate of Nongfu mountain spring.
Nongfu mountain spring’s offline channel system is an important competitive advantage. According to the financial report, by the end of 2019, Nongfu mountain spring has covered more than 2.37 million retail outlets nationwide, of which more than 360000 terminals are equipped with “Nongfu mountain spring” freezers. Although the number of freezers is still far ahead of Yuanqi forest, once the terminals of these canteens and mom and pop shops are eroded, it is bound to affect the market share and profit performance of Nongfu mountain spring.
What’s more, the above investors told Juchao, “because convenience stores and supermarket channels charge all kinds of extra fees, it’s actually not very profitable for FMCG brands to invest in these two channels. The most profitable ones are the canteens and mom and pop shops in high, middle and low tier cities and even villages all over the country.”
In addition, Yuanqi forest has also recruited some employees of Nongfu Shanquan. According to industry media reports, Malin, who used to work in Yuanqi forest, is the legal representative of Yuanqi forest (Beijing) Food Co., Ltd. and the legal representative of Shanghai bubble enterprise management consulting company. At present, Malin is present in at least eight companies related to Yuanqi forest.
Nongfu Shanquan, which was listed in September last year and is highly sought after by capital, is also facing a growth dilemma. Its first annual report after listing shows that its revenue has declined, its net profit has only a single digit growth, and its share price has also declined sharply. At this time, the consequences of the end channel being eroded by the opponent are what Nongfu Shanquan does not want to see.
In order to regain the favor of capital and save the declining performance, Nongfu Shanquan is also accelerating the launch of new products. In April this year, it launched soda bubble water, and its main label and publicity of “0 sugar, 0 calorie, 0 fat, 0 potassium sorbate” emphasize the Japanese style of “dawn white peach flavor, dawn white peach is produced in Fukushima Prefecture of Japan”, which is also directly against Yuanqi forest.
It’s no surprise that we have been the first to fight against Wahaha, Master Kang and Yibao, and now we are the first to fight against Yuanqi forest.
In order to attack the freezer launch plan of Yuanqi forest, the founder of Nongfu mountain spring, Zhong Qiong, recently took the oath personally and launched the “God of wealth from heaven” activity nationwide.
According to our media “kuaixiao”, in some areas, Nongfu spring asked dealers to display their soda bubble water in the refrigerators of Yuanqi forest, and gave specific rewards: for each bottle of Nongfu spring bubble water displayed, a bottle of Changbai snow with a price of 3 yuan at Nongfu terminal was given away, and 48 bottles were capped.
This strategy of “getting off the horse and getting on the horse” actually relies on the sales platform of Yuanqi forest bubble water to trade its own low-cost products for its competitors’ important pillar products. Even if it was not successful, Nongfu Shanquan sacrificed only one new product, but disrupted the other’s main set.
However, in response to this plan, Yuanqi forest quickly launched a counterattack. The order to the stores: all the stores that display Nongfu spring bubble water in Yuanqi freezer will not change the display fee. The competition between the two is increasingly fierce.
giant PK upstart, who will win
The competition between the two sides must be more decisive for Yuanqi forest, which also means greater risks.
Under the tension, how can a startup company with a valuation of nearly 40 billion compete with an industry giant with a market value of 10 times as high?
It may not be as simple as comparing numbers. Under the valuation logic of new consumer entrepreneurship, the vitality forest with a valuation of nearly 40 billion can also mobilize a lot of resources.
Previously, the beverage industry was a relatively healthy consumption project with no need to burn money. Typical examples, such as Wahaha and Nongfu Shanquan, basically did not rely on foreign capital and did not need to be listed. Generally speaking, investors in the valuation is generally based on PE P / E ratio to its valuation.
But now, the investment circle began to use PS to value consumer items. In the past, only consumer and industrial Internet projects were valued by PS market sales rate.
Yuanqi forest also adapts to this new set of valuation logic. Its founder, Tang Binsen, has preached to the market on many occasions about the Internet game in the field of consumer goods. As like as two peas, he once said that “the slogan of” the forest of Qi “is that people need to drink, earn more, and make profits at last, which is exactly the same as the Internet.
Under this logic, all kinds of resources that Yuanqi forest can mobilize are greatly leveraged. Whether it’s advertising expenses, or employees’ wages, channel rewards, subsidies to terminal channels, etc., there will be more space. As Tang Bingsen said, “we dare to spend 1.8 billion yuan on advertising when we generate 2 billion yuan.”
We only want to expand the scale and occupy the market, regardless of the cost. As long as we succeed, the capital market will pay the bill. The logic of this set of venture capital is very fierce, and as long as it is bigger, it is bound to cut the cake of the opponent.
Under the logic of PE valuation, Nongfu Shanquan’s marketing is much more conservative, because it will eat up the profit space and directly affect the net profit and valuation. In recent years, the proportion of advertising and promotion expenses in the income of Nongfu mountain spring is between 5% and 6%, and the actual investment may not be more than that of Yuanqi forest.
Under such valuation logic, once Yuanqi forest has occupied offline freezers and consumers’ minds with bubble water, it has achieved exponential growth; The Nongfu mountain spring has zero growth or even negative growth, which will have a great negative impact on capital confidence.
The annual sales target of Yuanqi forest in 2021 is 7.5 billion yuan, a year-on-year increase of 250%. In 2020, Nongfu mountain spring’s beverage business income excluding packaged water is 7.857 billion yuan, and Yuanqi forest’s target is very close to this figure.
Of course, although there is a gap between the valuation logic and the resources that can be mobilized, Yuanqi forest, as a challenger of the industry, does bear greater risks, even about survival. From this point of view, the competition between the two is not equal.
For Yuanqi forest, this is a battle of life and death. Once all-round resources are invested to burn up the money and the exponential growth and scale expansion are not realized, the follow-up financing may be unfavorable and the army will be defeated;
Once successful, opponents such as Nongfu Shanquan may be cut off an arm, and will not immediately bleed to death.
It can be seen that the competition between the two sides must be more decisive for Yuanqi forest, which also means greater risks.
at the end a6301
In the past 15 to 20 years, the Internet has reshaped the world. However, in the field of FMCG, there are not many emerging enterprises that can make 10 billion yuan. Yuanqi forest is one of the few outstanding ones.
The barriers established by traditional beverage giants are still hard to shake. The reason behind this is that building a brand requires a process of “cognition purchase loyalty”. All these three key points are indispensable: forming consumers’ cognition through various forms of marketing and promotion, laying intensive offline channels to facilitate consumers’ purchase, and then letting consumers buy repeatedly through satisfied taste.
If Yuanqi forest can’t spread its channels to low tier cities and countless traditional husband and wife stores, it will not be able to reach users and buy immediately, and it will gain consumers’ loyalty.
Nongfu Shanquan is known as the most wolf company in the industry, but it has been conservative in the launch and marketing of new drinks. The existing main beverage products are old products for many years. Due to the strong strategic new products often need to cooperate with intensive marketing and promotion, and there is a risk of failure, in recent years, the stability of Nongfu Shanquan almost no big action, so it still has a lot of room for development.
According to this, the competition between the two is still unclear, and the bullet needs to fly for a while.
Author: Jing Yu; Source: tide Business Review (ID: tide biz), reprint authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246);
: Cherry (wechat: 15240428449). Recommended reading key trends of Mars break leisure food 2021 World Dairy Innovation Award beer crisis functional fast food he food juice innovation “vitality” dark horse yeast extract selected column hot news for a week  |  Innovation interview – Ling Ting  |  New Xiu brand  |  Trend insight  |  Packaging outpost food people are “watching”

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